"These jobs are not coming back"

The unemployment rate climbed to 9.7% last month, a 26-year high...and the media told us that this is a good thing.

“[W]hether or not today’s and other recent reports overstate the case, the improving trend of the labor market after the autumn/winter carnage cannot be denied.

Ah, yes. The trend.
First of all, let's be clear what trend we are talking about. We've lost a lot of jobs, and we are still losing them - that is the trend.
Trying to spin that into a good thing is like putting lipstick on a pig. For the job situation to be "improving" requires that we stop losing jobs.

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What's more, the job situation is somewhat more bleak than the news media is reporting. To understand that we need to delve into the numbers.

The unemployment numbers of the past two months were revised upwards to include another 46,000 job losses.
You should expect to see lots more of that in coming months because of the Birth/Death Model, which counts theoretical business "births" and "deaths". It added 116,000 theoretical jobs last month, 26,000 more than it did in August 2008.

And then there is the seasonal adjusting again. Note the number of people no longer counted as in the labor force, thus doing their patriotic duty to hold down the unemployment rate.
In the seasonally adjusted numbers it rose 143,000, while subset of those still wanting a job rose 381,000.

But if you look at the non-seasonally adjusted numbers you find people no longer counted in the workforce rose 1,578,000 (an enormous number), while the subset of those still wanting a job rose 516,000.

Then you have to look at the types of jobs being lost.

First, employment in this survey showed a plunge of 392,000, but that number was flattered by a surge in self-employment (whether these newly minted consultants were making any money is another story) as wage & salary workers (the ones that work at companies, big and small) plunged 637,000 — the largest decline since March (when the stock market was testing its lows for the cycle).
The number of people not on temporary layoff surged 220,000 in August and the level continues to reach new highs, now at 8.1 million. This accounts for 53.9% of the unemployed — again a record high — and this is a proxy for permanent job loss, in other words, these jobs are not coming back.

Think about that for a moment.
Maybe some of you reading this are old enough to remember the early 1980's, and the job destruction in the Rust Belt. Remember how many cities never recovered from that, and how the economy permanently changed.

Now consider that things are worse now, and that we aren't just talking about the Rust Belt anymore. It's everywhere.
Given that, do you really think we will be seeing any serious job growth in the coming years?

There are now 223,000 fewer jobs in America than there were in August 1999. Meanwhile the country has 33.5 million more people.
That hasn't happened since the Great Depression.

The unemployment rate for adult males is already over 10%. For teenagers its 25.5%, the highest on record. The average duration of unemployment is also at the highest (24.9 weeks) since records started being kept in 1948.

Despite all these depressing numbers, there are two numbers that make it even worse.

The first number is 1.3 million. That's the number of people who's unemployment benefits are going to run out by the end of the year. 500,000 will exhaust their benefits before the month is out.
These people are going to lose another strand of the increasingly thin safety net. Right now more than 50% of people who collect unemployment exhaust their benefits before finding another job - another record.

Workers aren't the only ones running out of unemployment money. The states are too.

[Eighteen via latest updates] states have simply run out of money to pay benefits and been forced to borrow from Washington a total of more than $8 billion. That number is almost certain to grow as more states reach the brink. If they are not able to pay that amount back before 2011, which most will not be able to do, they face paying hundreds of millions of dollars in interest.
Many have been maintaining close to zero reserves [4] for years, well before the economy headed south. California, for example, got into trouble by raising benefits without increasing taxes. Other states, like Michigan, lowered taxes to unsustainable levels and watched their reserves dwindle.
Now, these states will be forced to raise taxes or cut benefits in the middle of a recession -- just when those changes will do the most economic damage.

The second number is 40%. That's the percentage of people collecting food stamp who are also employed - up from 25% just two years ago.
These people have watched their hours being cut to the point that they can no longer make ends meet without government assistance. Yet they are still listed as being employed.
On top of that, 34% of workers have one week or less in savings.

The job situation in this country will continue to get worse until the reasons for those job losses are addressed. The economy didn't break because the American consumer bought too few cars and houses. So tax credits to encourage people to buy more cars and houses doesn't solve the problem.
The problem is that Americans have too much debt, too little savings, and doesn't manufacture the goods that the rest of the world wants to buy. Until that changes jobs will continue to be scarce.


I'm going to say the "O" word

which is offshore outsourcing. There is just this pathetic attitude in this country that somehow workers are disposable and the first thing to squeeze to increase profits as well.

Beyond strategy, a way better manufacturing policy, investment in advanced R&D and frankly that should be in house corporate investment (they are outsourcing that too!), there needs to be some fundamental labor law changes or something which says you cannot trade people for cheaper and just confront this entire race to the bottom on wages/salary head on.

We don't have anywhere near this level of unemployment over in EU and other countries which have stronger labor laws.

I haven't done a comparison but I believe some of those countries GDP was hit worst than the U.S.

I found this map & thought of you.

I didn't know

the frozen tundra had such a large population. ;)

Honestly DK, I don't care where someone came from, except it probably reflects that national agenda to use people to capture services.

You are right on it!

Earlier today, Karl Denninger put this chart up to ponder over the weekend.

Denninger goes on to explain what is, and is not represented here. But it is especially noted that, this graph does NOT include mortgages!!

KD's conclusion is:

I have often been asked what it would take to bring the consumer credit picture back into balance with incomes. My "off the cuff" estimate was that we had to take a 10% adjustment to GDP in 2000, a 20% adjustment now, and that credit would have had to contract by about 20% in 2000.

This graph makes it clear - as of 2006 the answer is "roughly a 40% decrease in credit outstanding, a 40% increase in per-capita income, or any combination of the two."

Of note the "correction" required was 25% in 2000.

It was 40% in 2007.

It is likely better than 50% now.

Not bad for my "back of the envelope" computations when one puts hard numbers to the question, eh?

This graph, more than any other, illustrates the folly of "kick the can" when it comes to recessions. We are in this recession and facing an economic depression due to consumers "hitting the wall" - the spread between per-capita income and per-capita debt became impossible to service, and the defaults started to snowball.

To fix our economy consumer incomes must be brought back in line with per-capita debt - period.

There is no path out of this mess that involves taking on more debt, as is clear from the above, as doing so will simply cause the divergence between income and debt to widen further.

Wake up America.

To this I say Amen Brother! But the factories are closed and there are just so many burgers we can flip for each other.

that's the bottom line

U.S. middle class, workers are the big fat losers in this globalization, cheap labor game.

I'll have to read that Krugman article, I just don't get it because all I ever see is a lot of "bad math", bad assumptions, bad models vs. any of this "psychological stuff".

Article updated

I added a couple relevant links.


is showing how Google trends have a new spike in "W" and "double dip" recessions queries.

I find this kind of interesting (although I refuse to take it that seriously) that Google is so massive, literally it's kind of a thermometer of what is on people's minds.

I'd really love to see the overall "chatter" streams (which I think AT&T and a few others got into big trouble over a couple of years ago!)

No one can tell me that 10% unemployment does not matter....esp. not with 1.6% GDP projected (I don't think that's enough to trend water).

Move along folks, nothing to see here

I think the mainstream media is setting us up for violence. If proper context were put onto the numbers, at least the public would have some sort of valve to release pressure. But it's this nonstop spin about how things are getting better, and are "better than expected," that is creating a disconnect that could someday lead to people in the streets, as the situation on the ground deteriorates further and further, and the media increasing tells the public "nothing to see here folks .. move along .. we're in recovery .. just a little bumpy where jobs are concerned but better than expected and moving right along."

Context in August would be point out that "expectations" were only bettered by 9,000, which actually is swallowed by margin of error. And since the previous 2 months were revised up by 49k, as far as people not working, for all practical purposes that 49k could have just as well been added to August, for a loss of 265k. Not considering trend, the net effect of the August report was to inform us that 265k jobs have been peeled out of the economy, not 216k.

And the public is faced with this utter absurdity that each month's report is a green shoot. June was positioned as a green shoot, July was positioned as a green shoot, and now August is being positioned as a green shoot. So by that logic, green shoot + green shoot + green shoot should equal one giant green shoot. And yet it doesn't, it equals more than three quarters of a million Americans out of work with little hope of finding a replacement job of equal caliber.

So each month it's green shoots, then the next month more green shoots, then the month after that yet more green shoots. Green shoots heaped upon green shoots, and yet the situation on the ground just gets worse and worse. And the gigantic block of terminally unemployed just gets larger and larger.

When the public doesn't have this outlet, this pressure valve to feel it's pain, fury builds. During the Reagan Administration, the media scoured under every bridge finding every homeless person they could, and each seemingly got his own anecdotal "human interest" story. Now, with suffering reaching a crescendo (at least a local maximum) human interest stories have disappeared, since such stories do not jive with the green shoots narrative. There are enough human interest stories for a two hour prime time special every night of the week and they'd barely scratch the surface. Instead, all we get from the media is top-line statistics contorted as necessary to make them sound like green shoots.

This is what happens in banana republic dictatorships. The situation is always getting worse and worse on the ground, but state run media is continuing telling the masses "move along, nothing to see here, the great leader has it all figured out."

This is when societies come apart.

Very well put

This is a high quality rant, worthy of its own article.

EPI labor day unemployment fact sheet

Labor Day by the numbers, is also noting that due to the population numbers this ain't no static snap shot to get the country working again.

It has a whole lot of other statistics, for example, people near retirement age (65?) with < $40k in their 401ks, 50%.

• New jobs needed per month to keep up with population growth: 127,000
• Jobs lost in August 2009: 216,000
• Jobs needed to regain pre-recession unemployment levels: 9.4 million
• Manufacturing jobs lost since the start of the recession: 2.0 million (14.6% of sector’s jobs)
• Construction jobs lost in the recession: 1.4 million (19%, nearly one in five construction jobs)
• Mass layoffs (50 or more people by a single employer) in July 2009: 2,157; jobs lost: 206,791

Culmination of Events

What really bothers me is that, if you look at MSM articles, you'd swear that no one in the U.S. prior to 2009 has ever lost their jobs, had to take pay cuts, or had their hours cut in their lives. For a substantial number of people, they've had to live through these job loss/pay cut cycles since [name the economic downturn of your choice]. People deplete their savings, and spend the "recoveries" paying off debts rather than building up their savings accounts. I don't think the pundits truly understand that many Americans are fed up with stories about how much better off we'll be after each round of creative job destruction. Lower and middle class Americans simply cannot afford any more boom/bust cycles.

This winter of H1N1 should

This winter of H1N1 should do a lot toward solving the problem of unemployment and the people living under bridges. As far as news goes, spending $100+ a month to watch the sheeplemedia is money that could be better spent in countless other ways. Thank God for the internet....but isn't there a bill before congress right now giving the executive the power to shut down the internet in time of crisis. This will deprive the "enemy" of their communications.

People keep saying

26 year high. However, 26 years ago, unemployment was calculated differently, right? So is that number accurate?

Not much different

It's the CPI that has been changed dramatically int he last 26 years. Unemployment is still calculated mostly the same. The minor changes that have been made only push down the number, not up.

The job market

I agree with this. The job market is not going to improve unless people stop losing their jobs and the ones who already did find better jobs than what they had before. If everyone lost their job in September then the unemployment rate in October would be 0. So the numbers really do not mean anything. casino en ligne

Future Claims of Labor Shortages?

One thing we need to keep track of is what happens to the long-term unemployed. After the dot-com bust, tech companies were reluctant to hire anyone who had been unemployed for more than a few months. We quickly learned that we had "labor shortages" in many key areas, which led to a call for increased numbers of H-1B visas, and a call for more American students to major in engineering and computer science in college. The long-term unemployed could have been quickly brought back up to speed in their career fields if companies had been willing to hire them.

When we enter into our "recovery" period, I'm waiting to see if we again appear to have shortages of qualified workers, and also which industries claim they're suffering from the shortages.

oh you know they will

right now, they are trying to claim that bringing in foreign guest workers as well as offshore outsourcing creates jobs. Nice spin to try to turn not only fundamentals in labor economics upside down but also the statistics themselves.


Why do we hire foreigners to take over jobs that can be given to United States Citizens? People here are desperate for jobs!! Why hasn't the President done anything about the unemployment? How are we expected to pay our bills, yet alone feed our families? How pathetic to continue with wars spending our money when we shouldn't care about what takes place in some other country let their president worry about it. I feel we will never be able to stop crazy people its an ongoing thing. There are so many homeless people here and instead we ship out so much food to other countries lets worry about our people first.