The government reports that the U.S. economy added 146,000 jobs in November. The New York Times headline says that “Job Growth is Steady” and then cheerfully notes, in the first paragraph, that this figure was “well above the level economists had been expecting”. The Wall Street Journal describes the same facts with a summary paragraph beginning “Employers added jobs at a slow pace in November.”
[Neither paper enables its readers to compare the numbers easily to the number of jobs one would expect to be created in response to a larger population (a country with 311.5 million people should have more jobs than a country with 3 million people!). Perhaps this is because it is tough to find agreement on a number. http://www.economicpopulist.org/content/how-many-jobs-are-needed-keep-population-growth covers the diversity of numbers put forward. http://www.cepr.net/index.php/blogs/beat-the-press/how-many-jobs-do-we-need-teaching-arithmetic-to-economists makes a fairly compelling case that the correct number is 90,000 jobs per month. Back in 2006 people were debating between 110,000 per month and 150,000 per month (see http://economistsview.typepad.com/economistsview/2006/11/what_level_of_j.html ). http://www.zerohedge.com/article/monthly-non-farm-payrolls-have-grow-121000-month-2011-just-keep-population-growth cites Congressional Budget Office figures of 121,000 jobs per month from 2011 declining to 110,000 in 2012. If we accept that there are about 15 million Americans out of work (the BLS says 12 million but we know that they like to kick people out of the labor force in order to make the numbers seem less alarming), we can then figure out how long it would take for those folks to get jobs. The most optimistic scenario is 146,000 minus 90,000 = 56,000 jobs per month that will not be snapped up due to population growth. That gets rid of unemployment after 268 months (22 years). If we use the CBO numbers, it will take 35 years. If we take the old Wall Street number of 150,000 then there is no hope for reducing real unemployment. (We should probably adjust the 15 million figure downward a bit to account for the fact that some unemployment is inevitable due to job changes, moves, etc. Vibrant economies such as Singapore that don’t offer payments to the unemployed have rates of 2-3 percent. Therefore we have only about 11 million people who are unemployed for longer than normal and the 22- and 35-year figures should be reduced by about 25 percent.)]
[January 4, 2013: A jobs report came out today showing that 155,000 jobs were added in December, actually more than the number the New York Times, above, called “steady”. This time the headline is “U.S. Continues to Add Jobs at Slow Pace”.]
A deep analysis of the numbers is provided by Mike Shedlock (“Mish”) here:
http://globaleconomicanalysis.blogspot.com/2012/12/establishment-survey-146000-household.html
In the “tl;dr” world, the summary is this quote from Mish:
“Given the complete distortions of reality with respect to not counting people who allegedly dropped out of the work force, it is easy to misrepresent the headline numbers.
Digging under the surface, the drop in the unemployment rate over the past two years is nothing but a statistical mirage. Things are much worse than the reported numbers indicate.
Last month I said “before anyone gets too excited about this jobs report, note that it is just one month, and it may be revised away. Even if not, take another look at the index of aggregate hours and average wages vs. CPI because those charts reflect very important stories not at all seen in the headline numbers.”
This month shows pronounced weakness in the underlying numbers.”
What is the ratio of young people supposedly entering workforce vs retirees leaving workforce due to old age? Can it be derived from employment statistics?
Not much reason to get a job when welfare pays 20% more than the median income:
http://www.weeklystandard.com/blogs/welfare-spending-equates-168-day-every-household-poverty_665160.html