The sad reality of the labor market is that it is not improving. Based on our latest tally of "underemployment," 17.1% of you are effectively jobless. Furthermore, April's estimation of this figure continues a deteriorating trend. Weekly unemployment claims show no sign fading, driving the daunting question, "Can the economy truly recover without the employment of the jobless?"
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Boring! If weekly jobless claims were a company, the data produced on new benefits filers would be reliable, its dividends steady and the shares - a blue chip cash cow. If weekly jobless claims were a media provider, the news would be boring, monotonous, brain-numbing and ratings killing. However, weekly jobless claims represent the number of individuals filing for benefits for the first time each week. So then, based on the recurring high level of poor chaps swallowing their pride and hitting the unemployment line, this regular data is just plain sad.
Who needs the monthly Challenger, Gray & Christmas Job-Cuts data, when we have a regular tally of the newly unemployed reaching the wire every Thursday morning? Why should we trust the monthly Employment Situation Report, which tells us the net number of workers is increasing? Is there a phantom job market that is on fire, but the majority of us do not know about yet? So, if weekly claims, which are based on the very serious and very carefully screened benefits filer applications count, tells us the labor market is continuing to deteriorate, why should we believe the somewhat subjective data seen in other notes?
For the week ended May 8, the number of new unemployment benefits filers amounted to 444,000 individuals. Those are not numbers, but people who filed to receive a weekly government check to replace their old paycheck now lost. The prior week count was revised up 4,000, to 448K. The four-week moving average was 450,500, down 9,000, but still 450,500!
The insured unemployment rate has stuck at 3.6% for what seems like forever. Some 4.6 million people are receiving unemployment checks! Sure, insured unemployment was a full percentage point higher a year ago, but I wonder how many of those folks simply did not qualify for extensions of benefits and fell out of the count. Or perhaps they have simply given up completely, and moved home with mom and dad. Maybe they are in the fetal position on their undersized childhood beds, crying their eyes out and losing their minds. And so what that the number was higher; everything was worse then. We were shedding upward of 700K jobs a month. That does not make the current situation tolerable.
Employment Situation Report
Apparently, or according to popular press - or at least the radio reporter I listened to, the Labor Department report for April was wonderful. What?! Hello! You'll have to take my word for this, but on the Wednesday evening before the report's release, I told someone that the market would love the report Friday because it would note an addition of 300K jobs (I have witnesses!). I said though, that WSG adds value because I'll shed light on the fact that half of those supposed job additions will be from temporary workers hired for the census. I said that by mid-morning the market should get it; things still suck.
Wall Street Greek headquarters was very busy that particular day entertaining a foreign business contact and assimilating some new equipment. So, we hope you remembered and banked on our fore warnings about the jobs report in the works leading up to the data release (not to mention our warnings about Europe's complacency and Greece's imminent burning).
Nonfarm Payrolls increased by 290K, so I was 10K off. According to the report, 66,000 census takers were hired on a temporary basis, though we had heard the number would be as high as 148K ahead of the report. It sure seems like the hiring is not reaching the level that the government said it would, by far. In any event, if census hiring occurs through May and June, the census will provide a nice bridge toward a more hospitable labor environment for many of the nation's unemployed.
Still, the unemployment rate increased to 9.9%, from 9.7%. So what's up with that? You must be wondering how nonfarm payrolls could jump and unemployment increase at the same time, and how that could be good news, right? The Employment Situation Report includes data from two separate surveys, the Household survey and the Establishment Survey. Apparently, the two do not agree then...
Being the "Armageddon analyst" of old lore, I should of course favor the Household Survey. That's the one that indicates the labor market is still sadly lagging (even deteriorating), or reality basically. However, I realize that each group has its own independent reasons to exaggerate. It seems likely though that both survey groups would lean toward skewing information negatively. That is because we all want the government to continue feeding aid into the economy. I simply believe corporations are better at lying, or coloring things for their benefit. Americans though, when isolated, are generally honest folk. At least I hope they still are.
The Household Survey states unemployment increased, and the number of long-term unemployed (27 weeks or more) rose to 6.7 million in April (remember, that's more than the insured unemployed number - because lots of people did not qualify for extended benefits and are not finding help). That's not a good thing for spending, or survival for that matter, but there are other places for these people to find help, like the food stamp program and welfare. We hope so anyway, because the long-term unemployed now account for 45.9% of the total. In my view, the Democrats should be focused on making sure those falling through the hole of extended benefits find help, keep their homes and hope. Also, add to that support for small businesses, which we discussed in our last article, "Small Business: The Little Engine That Could."
Many of us are finding the DNA of our ancestors, and tapping into the hard work ethic that enabled them to survive hard times. Thus, some 9.2 million of us are working part-time jobs, despite once being fully employed. Maybe you're waiting tables or serving beers, or even flipping burgers and delivering pizza. God bless you for your humility in the face of necessity. I know how hard it can be to swallow pride and put your MBA on a shelf. After graduation, I delivered pizza for a year while sending out 30 resumes a week, with research reports and other materials included, in order to get a chance on Wall Street. I accepted small change tips, abusive language, and I mopped the floor with my MBA swallowed deep within. So I feel ya. However, to make it through, you must never trade in your spirit or self-confidence, and you must keep working toward what you want. Remember Alexander's quote that I published yesterday.
We have our own version of the underemployment rate here, which I like to publish monthly. Our figure includes part-timers who once worked full-time, in the count. This adjustment also adds back "discouraged" and marginally attached workers, who are not counted as part of the workforce or unemployed. If we add back the 2.4 million displaced workers to the labor market, and include the 9.2 million underemployed part-timers in the unemployed count, adjusted unemployment reaches ((15.26M + 2.4M + 9.2M) / (154.715M + 2.4M)) * 100 = 17.1%. That's up from 16.9% in March; 16.8% in February; and 16.4% in January.
So the sad reality of the labor market is that it is still deteriorating. I still believe that an economic recovery cannot be robust or lasting without labor market recovery. What do you think?
Data You Might be Interested In
The highest insured unemployment rates in the week ending April 24 were in Alaska (6.6 percent), Puerto Rico (6.3), Oregon (5.8), Nevada (5.1), California (4.9), Pennsylvania (4.8), Wisconsin (4.8), Montana (4.7), North Carolina (4.6), Rhode Island (4.6), Connecticut (4.5), and Idaho (4.5).
The largest increases in initial claims for the week ending May 1 were in New York (+4,021), Kentucky (+1,015), Pennsylvania (+773), Illinois (+611), and Tennessee (+609), while the largest decreases were in California (-18,546), Massachusetts (-3,628), Indiana (-3,242), Michigan (-1,748), and Florida (-1,291).
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