Digging into the Jobs Report Data

by Brett Hartvigson

You probably heard that the job report last week was dismal, unless you were REALLY busy last week with Labor Day season doing one or more of the following:

  1. Cleaning your grill for the final burgers & dogs of the summer.
  2. Last-minute school-shopping for the kids (I secretly bought a Crayola 64-count box with the built-in sharpener for myself).
  3. Faking a hamstring injury so you could lay on the couch and take in the first full weekend of college football in HDTV.

I tried a combo of these three personally, but even this impressive combo couldn’t drown out the negativity of the job situation in the US.

The July report showed that we added ZERO jobs in July – and in this case, the mathematics here are actually ZERO = a negative number, not neutral. This is because we need 125,000 jobs a month added just to keep up with population growth.

I sat in on an advisor webinar earlier this week hosted by Rob Arnott, PIMCO mutual fund manager and founder of Research Affiliates, who noted that from 1948 until 1980, men who considered themselves to be ‘in the labor force’ (working or wanting work) equaled roughly 98% of the male population ages 20-64. From 1980 to 2005, this proportion fell steadily, from 98% to 92%. This is a span of 25 years. However, it took just six years, from then until now, to fall half this margin to 89%. STEEP.

Arnott went on to further cite BLS data that showed male employment averaged about 94% of the age 20-64 until the 1975 recession. Today it is 81%. Let’s assume that the old labor force ratio of 98% could, in fact, work. That means that male unemployment – including those who have given up on the idea of gainful employment – is OVER 17%. SCARY.

My wife decided to begin a career and went back to work in 2008 when our twin girls entered kindergarten – it got me thinking about female work dynamics and I decided to do some research yesterday in that area yesterday when a client mentioned “his generation – when the term housewife trumped Mr. Mom”. A decade ago, women in the labor force equaled 82% of the female population ages 20-64. Currently it is 78%, with most of that drop occurring in the past 2 years. If the prior peak of 82% was a generational “peak”, then we can peg female unemployment at 13%. SORDID.

Average these resulting numbers and we get a figure of 15% unemployment relative to past peak labor-force levels, if we include those who have just given up looking. And, if you look at other factors like including those who have had hours cut or are working part-time but WANT full-time you can easily arrive at a TRUE unemployment rate of 20%. WOW.

When I finished this research at the home computer earlier this week, the twins arrived home from their first day of third grade to find me slightly slumping in my work chair. “What’s wrong Daddy?” they chimed in unison.

“Well girls, without jobs, we don’t have paychecks. Without paychecks, we can’t buy stuff. And if no one buys stuff, companies have lower earnings. And if companies have lower earnings then their stock price goes down….”

“But Daddy, we saw you buy the crayons at Walmart last week!”

Darn kids – can’t slip anything by them…. thank goodness! Maybe they are right and we will be OK? Sure hope so…if not, at least I have the built-in sharpener to whip out a resume.