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The So So Jobs Report

May 07, 2010 | By: Mr_Blue | Tags: jobs, unemployment rate, job guarantee

This morning, the Bureau of Labor Statistics released the Employment Situation for April 2010. There was good news and bad news. Overall, the report shows that our labor market is still broken.

Here is the Employment Situation Summary - April 2010

From the first line of the summary:

Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9 percent, and the labor force increased sharply, the U.S. Bureau of Labor Statistics reported today.

How does the number of jobs go up but unemployment rate go up?

First, this report is based on two separate surveys - one for households and one for “establishments” or businesses and government. The nonfarm payroll employment (number of jobs) figures come from the “establishment survey” and the unemployment rate comes from “household survey”. So that is one of the sources of the apparent inconsistency.

Something else is happening. Let’s look at the formula for the Unemployment Rate:

Unemployment Rate = No. of unemployed / Labor Force

And the Labor Force experienced a big increase in April because people who were not looking for work previous to April are now looking for a job. This means that they could be counted as an “unemployed person” or an “employed person”.

Good News

* The private sector created 224,000 jobs - this the best report since the recession began in 2007.

Bad News

* The number of long-term unemployed people continued to increase.

The problem is that the Jobs Hole is deep deep - we lost about 1.4 million jobs last year and 7.8 million jobs since the recession began in 2007. We have older workers having problems finding work and we have a large group of people about to exhaust their unemployment insurance. Our labor market is broken.

There are some economists who believe that the labor market is self-corrects to full employment. Yeah right - tell that to the 6.7 million people who have been unemployed for 27 weeks or more. One thing that would correct this problem is a direct job program plus a Job Guarantee.

Good luck.