Here's The Truth About The Massive, Million Plus Spike In People Not In The Labor Force

TBI ^ | 2-3-2012 | Joe Weisenthal

[blam]

Here's The Truth About The Massive, Million Plus Spike In People Not In The Labor Force

Joe Weisenthal
Feburary 3, 2012

There's a ton of hype today about the 1 million+ spike in people not in the labor force, and whether it undermines the good jobs data.

The chart is actually alarming at first blush.

Yow! Is someone cooking the books? Was there a gigantic exodus of people out of the workforce?

Hate to burst your conspiracy theories, but no.

As SilverOz at The Bonddad Blog points out, the BLS' own announcement points out that starting this year, brand new population data from the 2010 census is being used:

"Effective with data for January 2012, updated population estimates which reflect the results of Census2010 have been used in the household survey. Population estimates for the household survey are developed by the U.S. Census Bureau. Each year, the Census Bureau updates the estimates to reflect new information and assumptions about the growth of the population during the decade. The change in population reflected in the new estimates results from the introduction of the Census 2010 count as the new population base, adjustments for net international migration, updated vital statistics and other information, and some methodological changes in the estimation process. The vast majority of the population change, however, is due to the change in base population from Census 2000 to Census 2010.

So there you go. New population data is in. Thus this number went up.

Meanwhile, there was a big drop in the participation rate, as Jim Pethokoukis notes. He even goes so far as to call the 8.3 percent unemployment rate "phony."

Well, this too is flawed.

Again, more from the BLS:

(snip)

[kreitzer]

ok, so population went up and this increased people leaving the workforce? Something is incoherent to me here.

[tobyhill]

“Although the total unemployment rate was unaffected, the labor force participation rate and the employment-population ratio were each reduced by 0.3 percentage point. This was because the population increase was primarily among persons 55 and older and, to a lesser degree, persons 16 to 24 years of age. Both these age groups have lower levels of labor force participation than the general population.”

And why would these groups have a lower level of participation since the only part of the two groups that aren't in the workforce is over 65?

I know the BLS is attempting to justify their adjustments but the fact is that the population increased but the workforce participation decreased which doesn't make any sense.

[ZOOKER]

So you say the population went up suddenly?

Million people who don't work, but I bet they vote!

[jiggyboy]

He can try to spin away the spike, but he can’t explain away the trend: TEN MILLION PEOPLE OUT OF THE WORKFORCE IN THREE YEARS.

BLS’s various methods of statistical trickery, every single one having the effect of showing a lower unemployment rate, have been known for years if not decades.

[forgotten man]

There are a lot of people in their 50’s who were planning and needing to work into their 60’s. If you lose your job while you are in your 50’s it is very hard to get another a job. The government might call you “retired”, but I would call you unemployed.

[mrsmith]

Let’s just drop the “L” from “BLS”...

He says the figure changed because BLS used new numbers.

OK.
So the unemployment number changed though the actual situation is the same or worse.
Got it.

[stylin19a]

so, all this says is, it's been under-reported for 2+ years.

[tobyhill]

And the BS BLS claims that those might be unemployed but they aren't the quality of unemployed they were looking for in their survey.

[Qbert]

"The change in population reflected in the new estimates results from the introduction of the Census 2010 count as the new population base, adjustments for net international migration, updated vital statistics and other information, and some methodological changes in the estimation process. The vast majority of the population change, however, is due to the change in base population from Census 2000 to Census 2010."

Wasn't Rahm Emanuel in charge of Census 2010? In that case I really trust these numbers...

[Wuli]

The “baby boom generation” is starting, year b year to retire (leave the workforce).

Unless the “working age population” (primarily 24 to 65) expands faster than the level of retirement of the “baby boom generation”, the number of people who could be counted as employed plus the number who could be counted as unemployed will keep getting smaller.

This has been a demographic projection for years - as the baby boom generation retires, there will be less active payers into social security per retiree than there has been. Each worker paying into social security will be supporting a larger share of the payout costs for active retirees.

The employment, unemployment and payroll data are going to continue to be affected by this structural change in the population.

Only much larger immigration of working age persons and a much larger birth rate, and employment (jobs) for them, or humongous changes in social security and medicare, can change the adverse financial prospects, on taxes and federal deficits, from the retiring baby boom generation.

[mamelukesabre]

The age group of 16 to 22 has never had very good employment numbers...and is getting worse because more and more kids are choosing full time college and high school extra curricular activities over employment. This is why they are not counting this age group. I suppose they are extending it to age 24 because nowdays it takes longer to get a degree than it used to. A degree takes about 125+ credits now rather than the old traditional 100 credits. Most degree programs just cannot be completed in 4 years...unless you go for one of the worthless degrees like “minority studies”.

The baby boomers represent a bulge in the demographics. when they reach retirement age, they cause a surge in the numbers of old people. It is true they may not be unemployed, they may be retired. But this is still a drain on the economy and a stress on the federal budget because they are not paying income tax like they used to.

[blam]

"This has been a demographic projection for years - as the baby boom generation retires, there will be less active payers into social security per retiree than there has been. Each worker paying into social security will be supporting a larger share of the payout costs for active retirees.

You think we have a demographic problem...look at Japan:

Godzilla Will Come Out Of Tokyo Bay Before Japan Economy And Stock Market Rebounds

[MarySmith]

Actually those numbers are not correct. The BLS shows that the population went up.

The December non institutional population was 240,584,000
The January non institutional population was listed as 242,269,000 an increase in population of 1,685,000.

Participation in the work force decreased from 64% to 63.7%
that would be the people that don’t count any more (well according to the government somehow I want to believe long term unemployed still count somewhere).

Info compliments of the government
http://www.bls.gov/news.release/empsit.a.htm

[khelus]

hat tip to andy58-in-nh

“I am reminded of a truism: if you torture numbers long enough, you can get them to admit to anything.”

[freeangel]

“as the baby boom generation retires, there will be less active payers into social security per retiree than there has been”

Of course, losing ones job at age 61 is going to put a larger burden on those paying into the system, because the 60yrplus former workers(many of whom previously made large salaries) are now not contributers themselves since they are not able to find work.

[Wuli]

“Of course, losing ones job at age 61 is going to put a larger burden on those paying into the system, because the 60yrplus former workers(many of whom previously made large salaries) are now not contributers themselves since they are not able to find work.”

Sorry, your missing the point.

No matter how good the economy would be doing, the natural retirement rate of the baby boomers (age 65+), the national birth rate, the national rate of immigration of working age persons, the demographic mix of the population by age group, was expected and is now contributing to a working age population issue where those who are working (and will be working even with 4% unemployment) will, person by person, be supporting the social security and medicare systems at greater expense than previous generations did when they were working.

The current state of the economy may be making a bad situation worse, but even a greatly better economy will not, alone, make the issue go away or stop it from getting worse on its own.

[jeltz25]

the bottom line is that depending on which side you’re on, you’ll spin the #s in your favor.

Back in 2004 the GOP didn’t care about the U6 or the labor force or any of these other #s. All they focused on was the unemployment rate going down and the # of new jobs. The dems did care about those other #s and used them to go after Bush.

Now the situation is reversed.

If there was a GOP President and there were 250000 new jobs every Republican and conservative would be saying how great he’s doing and look at the new jobs.

If you have to spend all the time explaining why things are really worse that’s not a good sitaution. It didn’t work for Obama and the dems in 2010. they had all these excuses and reasons why things really weren’t that bad and why it was Bush’s fault. The voters didn’t buy it. Now the GOP is going to try and explain why things really aren’t that good and why it’s all Obama’s fault.

We’ll see what happens but I don’t think it’ll be any more successful. If this is an outlier and future reports aren’t as good, that’s one thing. But if we see consistent monthly job growth of 200,000+ over the next 4-6 months, none of this talk about labor force and discouraged workers and u6 and real unemployment will matter.

Even Romney is on record as saying the economy is getting better. What will he say in the Spring if we’ve had a million new jobs this year by then? In the fall if we’ve had 2 million new jobs this year by then?

Between Obama’s billion dollar war chest and the media spending the next 9 months telling everyone how much better things are getting...well, it doesn’t look too good.

[Wuli]

“You think we have a demographic problem...look at Japan:”

Yes, Japan’s is worse. That does not make our’s non-existent, or change the fact that throughout the period extending to full retirement of the entire baby boom genearation, our problem (federal cost of ss and medicare and how to pay for it) will keep getting worse, even in a better performing economy.

[Qbert]

“...One source from Capitol Hill wants to make this point as well:

Here is an important fact:  Despite a population increase…”

People working in Jan. 2009 – 142,099,000
People working in Jan. 2012 – 141,637,000

http://hotair.com/archives/2012/02/03/unemployment-rate-drops-to-8-3-243k-jobs-added/