Friday, June 05, 2009

Unemployment Jumps to 9.4%; Job Losses "Down" to 345,000

My first quick thoughts:

The May establishment survey shows 345,000 fewer jobs than in April. That is bad and makes my assertion that March was the recession trough look a little shakier. Still after the massive losses we saw over the last few months, it looks like an improvement.

The Bureau of Labor Statistics also surveys households. This survey shows an even bigger drop in the number of Americans who say they have jobs: 437,000. Remember that the household survey actually showed an employment increase (yes, I said an increase) in April and that this survey is subject to greater month to month sampling variation than the establishment survey. It also does not have the contemporaneous biases caused by the firms births/deaths adjustment process.

The headline news is the jump in the unemployment rate from 8.9 percent (compared to Wichita's 7.1 percent) in April to 9.4 percent in May. This is the worst since the early 1980s. (Unemployment hit a peak of 10.8 percent in November and December, 1982.)

How did the unemployment rate go from 8.5 percent two months ago to 9.4 percent?

The biggest driver is an increase in the work force of over a million in those two months. More people are looking for jobs.

Why? Hard times force more people into the work force. Most of the increase is among men and teenagers. This increase might reflect high school students and graduates looking for jobs sooner than the BLS's statistical adjustment assumes they do. There was a 536,000 increase in the workforce among those with no or only high schooling. The minimum wage increased last July and is slated to do so again next month. As often happens when the minimum wage goes up, the unemployment rate rises among minority teenages. It is now close to 40 percent for Black teenagers.


It looks like employment fell another 7,000 jobs in the aircraft industry. Still now there may be more jobs in aerospace than in the automotive manufacturing.

No comments: