March 7, 2008

February’s Employment Report (Updated for Media Mangling)

ALSO:
- See additional commentary on press coverage of the Employment Situation Report at this NewsBusters post.
- See this bigger-picture post — “Are the USA’s Adult Population and Workforce Shrinking? If So, Why?”

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Advance info:

  • ADP, in its monthly report, says that “Nonfarm private employment grew 23,000 from January 2007 to February of 2008 on a seasonally adjusted basis.” Of course, these are the same guys who posted a 130,000-job increase last month (since revised to 119,000) when the government came in with an employment decrease.
  • Forbes is predicting +30,000 jobs (vs. last month’s -17,000) and unemployment increasing to 5.0% from last month’s 4.9%.
  • CNNMoney.com is reporting a Thomson Financial consensus of +25,000 jobs and 5% unemployment, but is also saying that “economists are placing bets all over the map on which direction it will take.”

The actual report:

It’s from Uncle Sam’s Bureau of Labor Statistics, and arrives at 8:30. Here’s where it will be is.

Well, it’s the old bad-news, good-news combo — actually 2 out of 3 are good:

Nonfarm payroll employment edged down in February (-63,000), and the unemployment rate was essentially unchanged at 4.8 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment fell in manufacturing, construction, and retail trade. Job growth continued in health care and in food services. Average hourly earnings rose by 5 cents, or 0.3 percent, over the month.

That average hourly earnings number is the second “good” item.

Digging into the detail:

  • In the Household Survey (the basis for the unemployment rate), the workforce dropped again, this time by a whopping 450,000 after January’s 42,000 drop.
  • The actual number of unemployed people dropped by 195,000, from 7.576 million to 7.381 million. Adding that to January’s 89,000 decrease, the number of unemployed has dropped 284,000 in two months. Not a bad result during a recession (/sarc).
  • Prior-month revisions — December’s +82,000 (after last month’s revision) was revised to +41,000 (a -41,000 net change), while January’s -17,000 was revised to -22,000 (a -5,000 net change).
  • Maybe it implies more precision than exists, but I’m going to calculate it anyway — Carried to three decimal points, the unemployment rate was 4.975% in December, 4.925% in January, and 4.812% in February.
  • So the number of estimated number of Americans working at the end of February was 109,000 fewer (-63-41-5) than it was thought to be at the end of January.
  • African-American unemployment dropped a whopping 0.9% from 9.2% to 8.3%; teen unemployment dropped from 18.0% to 16.6%. Maybe the next item below has something to do with this.

What’s with the contracting workforce?

This extends a comment I made in January that I believe is even more relevant now.

  • The Household Survey element of the BLS report shows that the civilian labor force contracted by a whopping 450,000 in February, after dropping 42,000 in January.
  • At the same time, the unemployment rate and the number of unemployed went down for the second straight month.
  • Keep in mind that BLS doesn’t inquire as to legal status in its Household Survey questions. Therefore, the reported civilian workforce is designed to capture all who could be working — legal AND illegal.
  • If (emphasis “if”) these are indicators that the illegal-immigrant population has actually stopped increasing or is perhaps even decreasing (for an example, see Oklahoma; also see this and this), it may be that despite weak fourth quarter GDP growth, per-capita and/or per-household GDP based on the country’s real, all-inclusive population, including illegals, are still going up nicely.
  • If that’s the case, per-capita/per-household GDP would be a more relevant measurement than overall GDP in the current situation.

Unfortunately, I don’t see how you can get definitive answers to the the points I’ve just raised — and I don’t see the business press being smart enough, or open to anything that isn’t gloom-doom bad news, to catch on to this possibility. They may try to claim it’s “discouraged workers,” even the today’s report has statements that specifically contradict that claim.

Update: Here’s a bit of evidence supporting the out-migration theory — The BLS report shows that thetotal adult population is DOWN 246,000 from December to February. Would that perhaps mean that illegal immigrants are leaving, and if so, is it partially because of laws passed in Oklahoma and Arizona?

Media Mangling Update:

As if on cue, from Jeannine Aversa of the Associated Press:

Employers slashed jobs by 63,000 in February, the most in five years, the starkest sign yet the country is heading dangerously toward recession or is in one already.

The Labor Department’s report, released Friday, also showed that the nation’s unemployment rate dipped to 4.8 percent as hundreds of thousands of people – perhaps discouraged by their prospects – left the civilian labor force. The jobless rate was 4.9 percent in January.

Job losses were widespread, with hefty cuts coming from construction, manufacturing, retailing, financial services and a variety of professional and business services. Those losses swamped gains elsewhere including education and health care, leisure and hospitality, and the government.

The latest snapshot of the nation’s employment climate underscored the heavy toll of the housing and credit crises on companies, jobseekers and the overall economy.

The BLS report directly contradicts Aversa’s “discouraged workers” theory, with this statement:

Among the marginally attached, there were 396,000 discouraged workers in February, about the same as a year earlier.

I looked it up — February 2007′s discouraged worker count was 375,000. (Update: NewsBusters’ Noel Sheppard also noted that January 2008′s “discouraged worker” number was a lot higher [467,000] than February’s. Zheesh.)

Of course, Aversa made no mention of the fact, as noted above, that 284,000 fewer Americans were unemployed in February compared to two months earlier.

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