Friday, March 15, 2013

7 Unemployment Charts Which Do, Indeed, Tell the Truth about Jobs

At the end of last month, The Motley Fool published a set of graphs which tell us a lot about what is really happening with the jobs situation.  Titled 7 Employment Charts You’ve Got to See, written by Morgan Housel and available at , it starts as such:

Today, 5.5 million more Americans are working than were in February 2010. That's the good news.

But we are still likely years away from a jobs market anyone could consider normal. Twelve million are officially out of work. Millions more want full-time work but can't get it. The longer this lasts, the harder it is to break, as Federal Reserve Chairman Ben Bernanke told Congress this week: "Lengthy periods of unemployment and underemployment can erode workers' skills and attachment to the labor force or prevent young people from gaining skills and experience in the first place -- developments that could significantly reduce their productivity and earnings in the longer term."

It's ugly.

The first chart shows how long it has taken for jobs lost in recessions, over the past 65 years, to come back.  As I pointed out in Work’s New Age, that has become progressively worse.  Each recession from 1948 to 1980 has a line which looks like the letter V, or a sharp-peaked mountain, hitting a low point no later than one year after recession’s start and then rebounding, with the longest-lasting of these seven downturns recovering all of its jobs lost (though not enough to cover population increase) within 22 months.  The tracks for the most recent downturns, though, look like bowls, each one since 1980 wider than the one before.  In order, the recessions of 1981, 1990, and 2001 took about 26, 31, and 47 months to recover their jobs.  The 2007 downturn is, as of chart time, 59 months in, and has still made it little better than half way back.

Second, the article presents quits, layoffs, and hiring, along with posted job openings, since the beginning of 2001.  This chart shows that from the beginning of the most recent recession advertised jobs fell faster and farther than layoffs increased, and hiring reached a decade-long low.  In the four years since, though, posted jobs have increased much faster than people getting them. 

The third graph shows government employment, which, for the first time since 1990, has dropped, not counting temporary census-worker spikes.  Conservatives rejoice – government, at least the number of people working for it, is truly getting smaller! 

Fourth, we see the ratio between the number of workers quitting jobs and those being laid off or otherwise involuntarily removed.   From 2002 through 2008, that number fluctuated between 1.2 and 1.8, until the recession took hold in the spring of 2009, when it dropped to about 0.7.  Since then, it has rebounded, most recently to just short of 1.4.

The fifth chart shows unemployment rates by state, comparing current ones with previous recent-recession lows.  There are, of course, some large differences, from North Dakota (just over 3% now) to Nevada (a bit over 10%).  There has been the most post-downturn improvement in Michigan, Nevada, Ohio, and Alabama, a random-looking group of states, and the least in New Jersey, Pennsylvania, Connecticut, and New York, not random at all. 

Sixth, we have what Housel calls “one of the most incredible employment charts that exist,” of the percentage of men with jobs since the late 1940s.  It would be an exaggeration to say it looks like a ski slope, but it does resemble one of those graphs in old cartoons at the foot of a declining person’s hospital bed.  It starts at about 84%, reaches a little higher during the Korean War, then ratchets down, persistently if irregularly, to reach the latest 64-65%.  Last, we have the number of unemployed people per posted job opening, which shot up from 2.0 in mid-2008 to about 6.6 only a year later, and has since fallen back to about 3.3. 

What can we conclude from these?  In the first, unless the job-recovery trend continues for several years and there are no new recessions, the total number of positions lost late last decade is not coming back.  Second and seventh, job openings no longer mean job hiring.  Third, government positions are no longer a port from the employment storm.  Fourth, the recession is long over, and layoffs are not the problem – that is why it is not particularly encouraging news to hear, for example, that unemployment claims are down a little bit from the previous month.  Fifth, while the job situation has indeed improved since 2009, the best-performing states are simply too small to offer any broad-based help;  the 10 with the lowest unemployment rates all have 7 or fewer electoral votes, compared with third-worst California’s 55.  Sixth, while an aging population means more non-workers, men are becoming breadwinners less and less often, with huge implications for the American social fabric.

Clearly, employment times are changing – Work’s New Age is a well-entrenched reality.  Americans will make it through; since the winter of 1620, in which almost half of the Mayflower pilgrims died but the colony survived, we always have.  What we’re seeing now is not just a bad economic time – it is what we must face indefinitely, together, as a nation. 

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