What is the true unemployment rate? If you look at the above table you may be scratching your head. It doesn't seem like we have a 3.02 unemployment rate for those 45-49 years of age. Do we really have an unemployment rate of 7.4% for those 20-24 years of age? The most important thing to take away from this table is that the unemployment rate, by age group, is up for those 25-34 years of age and for those 45 years and older as compared to November of 2007.
A Shift in the Workforce
Last Friday the November Employment Situation Report was released at 8:30 in the morning. The impacts of the report were "ignored" within twelve hours of its release The main numbers that are discussed are the "jobs" number, the Current Employment Statistic regarding workers added or lost during the course of the month, seasonally adjusted. Some people reference the Non-farm Payroll number while others reference the Private Sector number. Very few people delineate the difference. Government jobs are included in the NFP number. Other numbers that receive attention are the seasonally adjusted (SA) unemployment (U3) number and the workforce participation rate. Other data can be found in the report, including the number of Part-time and Full-time jobs created or lost, the number of people working multiple jobs, the breakdown, by sector of where jobs are being created, and the number of men and women who are employed or unemployed. There is even a measure of underemployment, those working part-time for economic reasons, that is referenced in the report. This is not the same as the effective unemployment rate discussed in this column where the level of unemployment is compared with the level of participation. The authors of the employment situation report focus on the seasonally adjusted data. This column produces articles that focus on reality, also known as the non-seasonally adjusted data.
Reality - We lost Full-time Jobs and Gained Part-time Jobs last month. We saw the unemployment rate and the participation rate fall last month. We saw the number of people working multiple jobs rise last month. We set an all-time record high level of people working two part-time jobs during the course of a month. We have five sectors that have not seen their employment levels return to the same level they were during November 2008. There is a sixth sector that is below its pre-recession peak . We have fewer men working full-time jobs now than they were working during July 2007 (the peak of the pre-recession employment market.) We have more men working part-time jobs than they were working during July 2007. Women are working more full-time jobs and more part-time jobs. The effective unemployment rate is between 9.52% and 12.18%.
How are we doing by age group?
We have a failure to participate. We have strong participation for those 20 years of age to 59 years of age. This makes sense. Those are the prime working years. We have seen a spike in the workforce participation rate of those 60 years and older. That makes sense in light of the recovery from a recession delaying some peoples' retirements. We have seen the participation rate drop year over year until this year during the entire time that President Obama has been in office. We have seen some improvement in the same month participation rate this year as compared to 2015. We are not even back to 2014 participation levels in the aggregate
Here is where the breakdown by age is interesting. Participation is dropping between 2014 and 2016 for 20-24 year olds. we have seen a similar drop for those 30-34 and 35-39 years old. We have seen some improvement in the participation rate for those 45-49 years old and 50-54 years old this November compared to last November. Once again, some of this difference in participation rates is through aging out of a prior age group. What is obvious is that we cannot blame the drop in the workforce participation rate on the aging Baby Boomers. They are still working - especially those who are 60 and older.
There are more than two or three important numbers in the Employment Situation Report. We are not producing enough jobs for the workers that are being added to the economy. People are working harder (more part-time jobs and more two job working workers) and they are working longer. We have had an incomplete recovery. When we have an incomplete recovery people are unable to retire when they want.
It's the economy.
We have seen a drop in the workforce population for those 35-49 years of age - This is concerning. We know that we are seeing a drop in men working. We know that we have seen a drop in construction, mining and logging, manufacturing, and Information Technology jobs. Some of this is due to a shift in the age groups over the past nine years. People will move through one age group and into the next over a period of nine years. There does not appear to be a one for one shift. We have seen a drop of people 40-44 years of age of 2.167 million workers. we have only seen an increase of 446,000 worker from the ages of 50-54 years of age. We have seen a drop of 1.9 million workers between 45 and 49 years old. We have seen an increase of 3.7 million for those 55-59 years old. Is it really just a shift of 4.1 million in two age groups to 4.1 million jobs in two other age groups? How do we explain the addition of 10.6 million workers between 60 and 69 years of age?
We saw employment Increase last month for almost all age groups. We saw month to month declines for those 50-54 years old and for those 55-59 years old. we also saw a monthly drop in those 70-74 years old and 75 years and above, The annual differences were a drop for those 20-24 years old, 30-34 years old, 40-44 years old and 50-54 years old. We saw an increase in the annual rate of employment for the month of November for those 55 years of age and older, including those over 70 and 75 years of age.
We saw unemployment drop for almost all age groups. We saw unemployment increase month over month and year over year for those 50-54 years old and 65-69years old. We saw unemployment increase month to month and decrease year to year for those 60-64 years old. We saw unemployment drop month to month and increase year to year for those 70-74 Years of age.
We have Higher levels of unemployment now than we had during November of 2007 for those 50 and older, as well as for those 25-34 years of age. The real unemployment situation can be masked by an increase in the potential workforce population. While we do not have unemployment levels like those we saw during the Great Recession, we also do not have the participation rates that we have seen for decades.