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Economy lost 125,000 jobs and 652,000 workers in June

jobchart610.jpg

A brutal unemployment report this month. Payrolls dropped by 125,000. In another one of those unwanted lessons in how we calculate unemployment data, the unemployment rate dropped from 9.7 percent to 9.5 percent -- but not because people got hired. Instead, 652,000 people gave up and stopped looking for work. And that number might be higher than it looks, as the natural monthly growth in the labor force is about 100,000 -- so to see a 652,000-person drop might mean something like 752,000 current workers left as 100,000 new workers entered.

It's true that when the National Bureau of Economic Research dates the end of the recession, it will probably have ended months ago. And it's true that the financial crisis has been over some time. But we really do remain in a jobs crisis. The fact that things are getting better most months, though worse in some months, obscures both how bad the situation is and how rapid our improvement has to be to really make a dent in it. But in the Senate, Republicans and Ben Nelson are objecting to using emergency legislative powers to pass further unemployment benefits, and there seems to be no appetite to try to intervene in this crisis in any further way.

By Ezra Klein  |  July 2, 2010; 9:32 AM ET
Categories:  Economy  
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Next: The White House's economic message

Comments

Nobody cares very much about the headline number. At least mention the 225,000 Census workers that were let go over the month.

Posted by: TheodoreLittleton | July 2, 2010 9:50 AM | Report abuse

Also: The month was June, not May. And 'workers' is not precisely how I'd describe the 652,000 who left the labor force -- over half of them were not working, hence the drop in the unemployment rate.

Posted by: TheodoreLittleton | July 2, 2010 9:53 AM | Report abuse

certainly not a good report, but I definitely wouldn't call it brutal.
consider that in April the private sector added 33K jobs and in May it added 83K. Not great, obviously, but not as bad as you make it out to be.

Posted by: rt72 | July 2, 2010 10:13 AM | Report abuse

NBER's way of marking the dates of recessions is stupid, always has been. It's useful if you define "recession" as the economy actively getting worse, but most people luse "recession" to mean that economic conditions are rotten, and we still qualify for that, even by measures like GDP.

Posted by: paul314 | July 2, 2010 10:14 AM | Report abuse

paul314, we definitely need to either break people of the habit of referring to all bad economies as recessions or come up with a new term of art for three quarters of negative growth. As it is we've got a term of art (recession) that almost every lay person misuses, leading to all kinds of confusion.

The nerd in me wants people to just learn the definition of 'recession' and use it properly, but the English major in me thinks that ship has sailed and economists should give up on it and come up with a new term.

Posted by: MosBen | July 2, 2010 10:22 AM | Report abuse

Paul,

A lot of people of professionals in the field (including those at NBER) agree that the current definition is far too limited. Especially considering the changes in the last 20 years.

Posted by: jldarden | July 2, 2010 10:30 AM | Report abuse

Last month the gain of 410,000 jobs was bad because you couldn't count census (nevermind that it was the first time there had been positive private job growth in May of a census year in more than half a century); this month a loss of 125,000 is bad, and no mention of the census in your post. Hmmm. The report says the unemployment rate fell by 0.2%. That's not great, but it surely isn't "brutal" (would take two years to get back to reasonable employment levels at that rate). People are leaving the work force because they stopped receiving weekly checks that were conditional on them claiming to be in the work force. Oh noes!

In reality, June seasonal adjustments set a very high standard for jobs. For example, there were something like 1,050,000 more full time jobs in June than May.

The recovery isn't going to be fast. Construction will remain an anchor, as probably (hopefully?) will the financial sector, both shrinking in this report. But none of this should come as a surprise to anyone.

Posted by: eggnogfool | July 2, 2010 10:50 AM | Report abuse

rt72?

Barack....is this you?

Posted by: FastEddieO007 | July 2, 2010 10:52 AM | Report abuse

--"[T]here seems to be no appetite to try to intervene in this crisis in any further way."--

The tin despot's deceit is that the economy revolves around himself.

What's left of the free market will take YEARS climbing out from under the debt and dislocations piled on it by our incompetently overzealous government (cheered on by airheads like Klein.)

Posted by: msoja | July 2, 2010 10:57 AM | Report abuse

April the private sector added 33K jobs and in May it added 83K. Not great, obviously, but not as bad as you make it out to be.

Clearly you are not unemployed.

the economy needs to create 1.67 million jobs per year, or an average of about 139,000 jobs per month, to at least keep unemployment from rising. --http://www.highbeam.com/doc/1G1-136771890.html and this is from 2004. The # joining the workforce is probably higher now.

Until we get to that kind of job creation, we are sinking, not even treading water.

As an Obama supporter (because he is at least sane, unlike the opposition), I would like him to be honest with the American people about the state of the economy and the job market.

Posted by: srw3 | July 2, 2010 11:12 AM | Report abuse

"752,000 current workers left"

But what's this number mean? How do we know the stopped looking for work? Do all 752,000 email the government to let them know they're tired of looking for work, so they're just stopping?

What is the likelihood that a number of those folks are working part or full-time in an all cash economy? Or as under-the-table cash workers for legitimate businesses?

How many of those people are near retirement age, with uninspiring but adequate retirement assets, just deciding they've collected their unemployment, that check is or is just about up, so I'm going to go ahead and retire?

Do any of those people drop off because they've taken work outside the U.S.? Telecommuting and getting paid via PayPal or moving to China with their precocious, kung fu loving son, Jaden Smith?

How many of those people are actually working for some kind of work, but aren't reported as looking for work because it might be detrimental to them in some way?

I don't know. That number just mystifies me.

Posted by: Kevin_Willis | July 2, 2010 11:22 AM | Report abuse

msoja: "What's left of the free market will take YEARS climbing out from under the debt and dislocations piled on it by our incompetently overzealous government"

Ah, it was the "free market" that caused most of the present crisis. Much of the government deficit is due to decreased revenue resulting from the economic collapse. No one told the investment banks to leverage themselves 30:1 and buy things that they didn't understand (so that they were probably leveraged far more than that). No one told the private sector to provide "liar's loans." No one told the private sector to gorge themselves on credit default swaps.

Yes, long-term government debt is a problem. But the present crisis was brought on by "free market" private debt. This instinct to blame government instead of an ideological commitment to free markets simply defies the facts. I like free markets in general, but I refuse to ignore situations where market incentives lead to tragic results.

Posted by: dasimon | July 2, 2010 11:31 AM | Report abuse

"the economy needs to create 1.67 million jobs per year, or an average of about 139,000 jobs per month, to at least keep unemployment from rising. --http://www.highbeam.com/doc/1G1-136771890.html and this is from 2004. The # joining the workforce is probably higher now."

Boomers are starting to retire, but that's probably true.

However, by population survey we've added 1.4 million jobs since december, by establishment 900,000. Those are very healthy given the state of the construction industry, and seasonal construction jobs that aren't added in the spring won't be lost in the fall (without seasonal adjustments, we've added 3-4 million jobs so far this year).

Posted by: eggnogfool | July 2, 2010 11:36 AM | Report abuse

@eggnogfool : we've added 3-4 million jobs so far this year).

Is that gross or net (jobs created-jobs lost)?

If we have added 3-4 million jobs, don't you think the Obama admin would be shouting this from the rooftops?

the BLS had released job employment totals from January through April. Since then, May figures also have been released. In those five months, 982,000 new jobs have been added to the U.S. economy -- or nearly 196,000 new jobs a month. --politifact

I would be the first one to cheer your numbers on if I thought that they were accurate.

Where are you getting your figures?

Posted by: srw3 | July 2, 2010 12:01 PM | Report abuse

@srw3:

"without seasonal adjustments" was very key in that statement. my numbers are from the BLS, using their 'historical A and B tables' options,

People use the "seasonally adjusted" numbers because there are very strong seasonal tendencies in most/all economic numbers; they are the 'correct' numbers to use.

But that doesn't mean that they are perfect, and if there is reason to think that ratio of seasonal/non-seasonal job creation is abnormal, it's worth noting.

Posted by: eggnogfool | July 2, 2010 12:12 PM | Report abuse

"But what's this number mean? How do we know the stopped looking for work? Do all 752,000 email the government to let them know they're tired of looking for work, so they're just stopping?"

Kevin, the government surveys about 60,000 households each month. It asks them questions like are you employed? Full time or part time? Are you looking for work? What is your race/age/gender?

It then matches those survey results up with population estimates and this generates the numbers we see. We have some sample error due to this, and that's why the numbers can look volatile (remember when Ezra was talking about how people joined the labor force and that was a sign of optimism? same thing).

Posted by: justin84 | July 2, 2010 12:24 PM | Report abuse

@srw3

because i said that ezra's characterization of the jobs #'s was not accurate (i.e. brutal), it means that I am not unemployed??
I never said it wasn't bad, just nowhere near as bad as he said.

Posted by: rt72 | July 2, 2010 12:47 PM | Report abuse

"Ah, it was the "free market" that caused most of the present crisis. Much of the government deficit is due to decreased revenue resulting from the economic collapse. No one told the investment banks to leverage themselves 30:1 and buy things that they didn't understand (so that they were probably leveraged far more than that). No one told the private sector to provide "liar's loans." No one told the private sector to gorge themselves on credit default swaps."

But we did tell the banks we'd bail them out. Well, we didn't tell them that, but we'd been doing it for decades so same thing. And we told depositors we'd insure their money at banks, so by all means stash a lot of it there. An investors knew large banks probably could count on a bailout, and so their cost of capital went down further (esp. the GSEs). And we had banks manage their portfolios and capital via a risk based capital system, which gave favorable treatment to things like AAA RMBS and Greek government bonds. And many local governments created land use restrictions which prevented housing supply from accomodating demand and launching many of the regional price bubbles. And we did tell lenders that if they rejected a dispropotionate share of applications from a favored political group, that they would risk political intervention. And Fannie and Freddie provided a lot of liquidity to low income borrowers, leaving the chaff to private lenders and also helping the fuel the price increases which made getting into subprime profitable to begin with. And we did formalize S&P, Moody and Fitch as 'the' rating agencies, effectively creating a government cartel. You couldn't use another rating agency for your MBS. And the Fed marveled at how things like credit default swaps and securitization spread risk and reduced systemic risk and - like 4WD SUV owners during a snowstorm - the perception of increased safety led to greater risk taking. And you had the Fed hold rates at very low levels, which was particularly important for the ARM market since most ARMs reset off of 1yr treasuries. And we treat debt favorably, both mortgage and corporate, by making it deductible from taxes. And Asia/Middle East pegged their currencies to the dollar, importing our loose monetary policy and using their savings to maintain their exchange rates rather than buy our exports (okay, this is foreign government bad, not U.S. government bad). Etc.

There was hardly a free market in housing. There was a mixed market with lots of government interference acting in myraid ways.

People complain about greed. Greed is always there. It has been said the best two regulators are profit and loss. We did much to improve private sector profits - both for business and homewowners - and much to protect them from loss, both in reality and in perception. The result is predictable in nature, if not in scope.

Posted by: justin84 | July 2, 2010 1:04 PM | Report abuse

Kevin Willis asks: "How do we know the stopped looking for work? Do all 752,000 email the government to let them know they're tired of looking for work, so they're just stopping?"

There's something called a statistical survey, where a sample of the population is interviewed to determine facts about the population as a whole, plus or minus a statistical error factor.

The survey in question is the Current Population Survey (CPS), conducted monthly by the Census Bureau for the Bureau of Labor Statistics. Here's a link to the questionnaire:

http://www.bls.census.gov/cps/bqestair.htm

"What is the likelihood that a number of those folks are working part or full-time in an all cash economy? Or as under-the-table cash workers for legitimate businesses?"

There are relevant questions in the CPS.

"How many of those people are near retirement age, with uninspiring but adequate retirement assets, just deciding they've collected their unemployment, that check is or is just about up, so I'm going to go ahead and retire?"

Ditto.

"Do any of those people drop off because they've taken work outside the U.S.?"

Yes, but they'd no longer count as unemployed, because the sample consists only of domestic households. They'd drop out of the numbers altogether.

Etcetera.

Posted by: rt42 | July 2, 2010 1:22 PM | Report abuse

I think the number of people who "stopped looking for work" is a number used to make the unemployment figure better than it really is. When I have lost my job too many times in the past, I certainly never stopped looking for a job. I had to eat, and my family had to eat, not to mention other necessities. If there is a number displayed as people who stopped looking for work, I would like to know how they say they are supporting their needs. This country (USA) needs to pull jobs back into this country for national security reasons (so that the United States may again become self-sufficient as we were in World War II which we still praise ourselves for winning) and the obvious--people need to work. Not everyone can be a parasite by making commissions on financial deals. There is much less demand for that type of work.

Posted by: kische | July 2, 2010 6:03 PM | Report abuse

Surely Obama's plans for massive tax increases in 2011, increased energy costs, increased regulation, increased union power, massive increases in government size and cost, increased union power, unprecedented borrowing and printing of money, and micromanagement of EVERYTHING will encourage businesses to grow.

Liberals are at war with business, and business is losing.

Posted by: RSweeney1 | July 2, 2010 6:17 PM | Report abuse

Nice touch airbrushing the timescale, hack. Do you know where JournoList is tonight?

http://libertyatstake.blogspot.com/
[For a light hearted take on our present peril]

Posted by: libertyatstake | July 2, 2010 8:24 PM | Report abuse

--"No one told the investment banks to leverage themselves 30:1"--

Pfffffffff. You mean the meddlers overlooked some aspect of bank busybodying? Somehow, I doubt it.

But, so what? The way a bank conducts its business should be of concern only to its owners and its potential customers. If you don't think banks should be lending thirty to one, don't deposit your paycheck with those that do, and don't buy their shares.

But then, too, don't go all sanctimonious when a high risk institution blows it and starts to go belly up. It's immoral to steal from people to paper over the mistakes of incompetents and morons.

Posted by: msoja | July 2, 2010 9:19 PM | Report abuse

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