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My preferred word to describe today’s unemployment numbers comes from Robin Harding in this morning’s Financial Times: “perverse” (though you need a subscription to read the article). That is, a paltry 74,000 new jobs were added to the economy, according to the survey of employers. Our own inclusive U-7 statistic for those who want a full-time job but can’t find one barely budged, from 15 percent to 14.97 percent, including more than 24 million of us. Our “Solman Scale” measures the “U-7,” adding to the officially unemployed part-timers looking for full-time work and “discouraged” workers — everyone who didn’t look for a job in the past week but says they want one. Note that seasonally adjusted household data for previous months has been revised using updated seasonal adjustment factors, as the Bureau of Labor Statistics does at the end of each calendar year. Because of these revisions, November figures referenced in this month’s Solman Scale may be slightly different from in their original release last month and last month’s Solman Scale.
On the other hand, however, a remarkable half-a-million fewer Americans were reported as “unemployed,” driving down the unemployment rate from 7 percent to 6.7 percent. How to explain the perversity? I’d highlight several factors.
One, to paraphrase the DJ in “Groundhog Day”: it’s been COOOLD out there. Construction jobs were down in December, for example. Any wonder as to why?
Two, discouragement. Yes, half a million Americans seem to have left the unemployment rolls, but at the same time, the workforce apparently shrank by more than 300,000 — and that’s in a month where the civilian population rose by its usual 200,000 or so. These are people who haven’t looked for work in the past 12 months but would work if they thought they could find any. The number of people officially “not in the labor force” who told surveyers that they “currently want a job” shot up by more than 300,000, after dropping steadily all year at an average rate of 100,000 a month.
Three, statistical wobble. As Robin Harding puts it in the FT, “The margin of error on the report is plus or minus 90,000 jobs for the headline figure and plus or minus 0.2 percentage points on the unemployment rate.” Actually, depending on what statisticians call the “level of confidence” you use, the margin of error can be greater still, since the reported numbers are only based on samples: 60,000 households for the “household survey” and 140,000 businesses and government agencies for the “establishment survey.”
I’d add a fourth factor that I’ve been pushing for months now: baby boomers reaching 66 and “retiring” — no longer looking for work, that is, though they’d take a job if one they found suitable were available. I should report, however, that our jobs expert on Friday’s NewsHour, Lisa Lynch of Brandeis, doesn’t think “retirement” is much of a factor, pointing out that much younger age cohorts are also participating in the workforce at historically low rates, which means they too have left the labor force, at least for now.
Bottom line: a surprisingly weak jobs report. Let’s hope it’s a fluke.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions