The Civilian Noninstitutional Population: Focusing on the Labor Force (Employed & Unemployed) and Discouraged Workers

The Employment Challenge Ahead...

This morning, the Employment Situation for February 2012 was released by the U.S. Department of Labor, Bureau of Labor Statistics

Total nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today. [Note: The unemployment rate actually increased slightly to 8.27 percent (from 8.26% in January).] Employment rose in professional and businesses services, health care and social assistance, leisure and hospitality, manufacturing, and mining.

Note: there are two surveys employed by the Bureau of Labor Statistics to measure employment: the Household Survey (Current Population Survey) includes a sample from all households, while the Payroll Survey (Current Establishment Survey) includes data from larger companies, though narrower in focus, which submit monthly workforce data.

Down the Rabbit Hole (and Through the Looking-glass): Where Employment Rises and Unemployment also Rises???

May 10, 2011

In the following table, we summarize the current status of the Employment Picture and the monthly changes:

February 2012 Civilian Non-institutional Population and LFPR Adjustment — Civilian Noninstitutional Population = 16 years and older who are not in military, incarcerated, etc.; Labor Force = Employed + Unemployed (must be actively seeking employment).

Changes in Civilian Noninstitutional Population and Labor force Jan 2012 thru Feb 2012 — +476,000 (Labor Force) - New adds 166,000 (Civilian Noninstitutional Population) = 310,000 participants returning to the Labor Force

We'll get to the Labor Force Participation Adjustment in a bit (Item 3).

We're going to focus on a few items:

U-3 Unemployment Rate or the Official Unemployment Rate and an alternative measure of unemployment, or the U-6 Unemployment Rate

Encouraged Worker Effect? The Unemployment Rate rose slightly from 8.26% in January to 8.27% in February, a 0.1% increase. This is the first uptick in the Unemployment Rate since June 2011. The more inclusive U-6 Unemployment Rate dropped from 15.1% to 14.9%, a 0.2% decrease.

Updated U 3 and U 6 Unemployment 2012 — U-3 or the Official Unemployment Rate actually rose 0.01% in February.

U 3 and U 6 Defined February 2012 — The U-6 Unemployment Rate accounts for many more discouraged and other categories, including underemployed, etc. It is currently significantly higher than U-3...perhaps an indication that there is a great deal of cyclical and structural unemployment

Civilian Noninstitutional Population and its component parts

The Civilian Noninstitutional Population (those persons 16 and over not in institutions, e.g., military, prison, etc.).
Civilian Labor Force (those persons employed and unemployed)
The Labor Force Participation Rate is the relationship between the Civilian Labor Force as a percent of the Civilian Noninstitutional Population.

Unemployment and Employment are subsets of the Labor Force; Civilian Noninstitutional Population includes the Labor Force and those '16 and over' who are not in the Labor Force.

Key Employment Figures Jan 2009 vs. Feb 2012 — Between January 2009 and February 2012, the Civilian Noninstitutional Population expanded by 7.7 million, but the Labor Force only absorbed 700,000 which equates to 7 million increase in non-working (or seeking employment).

Since January 2009, employment has fallen slightly and Unemployment increased slightly, but the big difference is that 7 million Americans are on the sidelines, removed from the Labor Force!

January 2009

Civilian Noninstitutional Population = 234,739,000

Labor Force = 154,185,000
Employed = 142,201,000
Unemployed = 11,984,000

February 2012

Civilian Noninstitutional Population = 242,435,000

Labor Force = 154,871,000
Employed = 142,065,000
Unemployed = 12,806

Difference (Decrease)/Increase

Civilian Noninstitutional Population = 7,696,000
Labor Force = 686,000
Employed = (136,000)
Unemployed = 822,000
Sidelined from Labor Force = [7,696,000 – 686,000] = 7,010,000

Key Employment Figures Jan 2012 vs. Feb 2012 — The good news was that there was an uptick "encouraged workers" from Jan 2012 to Feb 2012...476,000 increase to Labor Force, but only 428,000 were added to the Employed rolls --- Unemployed increased by 48,000

From January to February 2012, of those sidelined, not in the Labor Force 310,000 have moved back into the Labor Force. Employed rose by 428,000, but unemployed also rose by 48,000. How can this be?

Civilian Noninstitutional Population rose by 166,000
Civilian Labor Force rose by 476,000 (Civilian Noninstitutional Population 166,000 + 310,000 formerly sidelined [not in Labor Force])
Employed increased by 428,000
Unemployed 48,000 = Civilian Labor Force (476,000) – Employed (428,000)

The Civilian Noninstitutional Population continues to expand at a rate of around 150,000 per month.

Civilian Labor Force — In Feb 2012 the Labor Force expanded by 476,000 (428,000 Employed and 48,000 Unemployed)

Not in Labor force on the sidelines — The 'Not in Labor Force portion of the Civilian Noninstitutional Population finally began to shrink...310,000 in February 2012

2007 vs. 2011 Labor Force Participation Rate by Age Group — Those in the Labor Force between 16 and 54 saw losses from 2007 to 2011; those 55 and over increased their Labor Force Participation Rate...perhaps it might have had at least something to do with the fact that many older workers do not need medical coverage (retirement plans and Medicare).

Changes in the Labor Force Participation Rate

In previous newsletters we noted that while the Labor Force Participation Rate may have fallen off in the very youngest of cohorts (ages 16-24) due in part to more full-time enrollment in postsecondary education, the fact is that the Labor Force Participation Rate has dropped across the board, from age 16 through age 54. The surprising thing is that since 2007, the Labor Force Participation Rate has risen significantly for ages 55 and up.

The Labor Force Participation Rate is the relationship between the Civilian Labor Force (those persons employed and unemployed) as a percent of the Civilian Noninstitutional Population (those persons 16 and over not in institutions, e.g., military, prison, etc.). The Labor Force Participation Rate was 63.88% in February 2012; the last time the rate was below 63.9% [prior to January 2012 63.7] was May 1983 (63.7%).

U 3 Unemployment with adjustment for 67 percent Labor Force Participation Rate — Adjusting U-3 Unemployment to reflect a 67% Labor Force Participation Rate reveals a huge gap of nearly 5% in 'hidden' unemployment.

U 6 Unemployment with adjustment for 67 percent Labor Force Participation Rate — Likewise, there is also a significant gap between the reported U-6 Unemployment Rate and that reflecting a 67% Labor Force Participation Rate.

Lies, Damned lies, and Statistics

December 5, 2011

Labor force Participation Rate

The labor force participation rate represents the proportion of the civilian noninstitutional population that is in the labor force. This measure of labor force activity grew from about 60 percent nationally in 1970 to about 67 percent in 2000, with much of the increase resulting from increased participation by women.

THE CHALLENGE AHEAD

The good news in terms of the overall employment picture is that in spite of increase an in the Unemployment Rate from January (8.26% to 8.27%) the Labor Force Participation Rate grew from 63.73% to 63.88% but consider the following:

In order for the unemployment rate to be at 8%, including a Labor Force Participation Rate of 66%, we would need to have 5 million more people employed. With an average increase in the Civilian Noninstitutional Population of 150,000 per month, it would take 24 months, adding 360,000 jobs every month to reach 8% unemployment and the 66% Labor Force Participation Rate.