Unemployment is up! Unemployment is down! Jobs are available everywhere! There are no jobs!
If you watch a financial news channel for more than 10 minutes, you are reasonably sure to hear and see each of these topics offered – sometimes by the same commentator! How can that be? Are there jobs available or not? Is there a reliable unemployment “rate” which can be used to gauge the health of the U.S. economy?
Let’s start with actual numbers, released monthly by the Bureau of Labor Statistics (“BLS”), which is a division of the Department of Labor. In March of 2012 the “Nonfarm payroll employment rose by 120,000… and the unemployment rate was little changed at 8.2%…” Many economists suggest that if the US economy could add 225,000 new jobs each month, then the unemployment rate would start to decline. That’s because approximately that same number of new workers enter the jobs market each month. If more jobs are created, then those new workers are absorbed and the unemployment rate drops. If fewer jobs are created, then the unhired new workers are simply added to the unemployment rate and it rises.
Predictably following the BLS report’s release, incumbent politicians pointed to prior months’ reduction in unemployment, while political aspirants pointed to the failures of the incumbents as the cause of the employment malaise. Whom to believe?
We’ll need to dig a bit deeper here in the BLS reports to find the truth, especially as it applies to you, the reader. In another news release, the BLS describes how the numbers are actually calculated. For example, while in March the net number of new jobs was 120,000; several million Americans lost their jobs while several million Americans were hired. If you lost a job and were hired into another job in March, you were counted in both categories!
The BLS has a hard time keeping all of the statistics right up to date, so the category I’d like to discuss is only updated to the end of February, 2012. The key terms here are “hires” and “separations.” If you started a new job, you were in the former category; if you lost your job, retired or voluntarily terminated, you were in the latter category. In February alone there were 4,385,000 hires and 4,092,000 separations. Thus, the employment growth in February was a positive 293,000. The media focuses on the net number, but I’d suggest that we really should be focusing on the components. If 4.4 million Americans started a job in February, then there must be a lot of jobs out there.
In the same report, the BLS outlines the Net Change in Employment – “Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining… Over the 12 months ending in February 2012, hires totaled 50.6 million and separations totaled 48.6 million, yielding a net employment gain of 2.0 million.” Note the hires figure above – over 50 million new jobs in the past 12 months!
What if you or someone close to you is having trouble finding a job? There was a recent New York Times article with some interesting thoughts. Commenting on the March employment report referenced above, Michelle Girard, senior US economist at the Royal Bank of Scotland remarked “Many companies contend that they would hire more if only they could find more skilled workers. Other workers are unable to move for a new job because they are stuck in homes that are worth less than what they owe on their mortgages.”
Think about the combination of those two major points – if there were more than 50 million new jobs in the US in the past 12 months, and if Ms. Girard is correct that employers would hire even more Americans if they could relocate or improve their skills, is there a job out there just waiting for you?
Good luck!
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