Monday, November 5, 2012

October Surprise

Haven't really had a chance to look through the numbers thoroughly, but the first Friday of the month is like Christmas to data junkies who follow the job market.  UNEMPLOYMENT NUMBERS ARE OUT!

Yes, yes, I take joy in the misery of others...

No, not really.  While the media does focus on one or two numbers, the Department of Labor's Bureau of Labor Statistics looks at a crazy amount of data in 25 separate tables, and throws number after number at you until you have a robust idea of the nature of the workforce at this particular point of time.  Or, you know, the Obama campaign mentions that 171,000 jobs were created while the Romney campaign looks at that slight increase in the unemployment rate.

Neither really demonstrates what's at play right now.  I kind of like Table A-11 for this type of analysis, unemployed persons by reason of unemployment.  If it is true that more jobs existed this month than last, but the unemployment rate did not change, then what's going on?  Well, looking at this table, you start to see what it might be when you really think about what the unemployment rate is.  To be unemployed, you must have had to have actively looked for work in the preceding week.  So, when you look at how the percentages in the distribution shifted from October 2011 to 2012, you see increases in Reentrants and New Entrants to the work force.  You also see an increase in job leavers.  Put these three things together, and you have an economy where people are a little more optimistic about finding a new job than they had been a year ago.  People are leaving their crappy bosses behind figuring that they can do better.  The long-term unemployed have decided that they might be able to find jobs again (a more pessimistic point of view is that they've run out of savings and benefits and have no other choice).  Kids have decided to try to find jobs rather than hide in law school for three years.

Sure, fine, that's all well and good, but these are subtle shifts - 3 percentage points.  Yes, this is true.  I'm interested in the movement of the composition of the unemployed.  If you worry about the totals, then there's good news there, too.  When you remove the frictional unemployment, and look at the nitty-gritty bad shit unemployment, the total number of permanent job losers, there's good news there, too.  Over the past year, the unemployed for this reason has fallen from 5.3 million to 4.3 million.  It sucks if you are one of those 4.3 million, but the number is headed in the right direction if your goal is total employment.

The news really isn't as bad (or as good) as most in a campaign or the media will make it out to be.  The question is whether or not people will form their own opinions when data is thorough and readily available.  Sadly, I don't think many people know exactly what the monthly unemployment figures really are, despite how easy they are to find and how widely reported they are.

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