sábado, 9 de noviembre de 2013

sábado, noviembre 09, 2013

November 8, 2013, 1:07 PM ET

What’s Going On With the U.S. Labor Force?

ByBen Casselman
 
The American labor force shrank by 720,000 in October, the Labor Department said Friday, the biggest one-month decline since 2009. As a share of the population, the labor force is now the smallest it’s been in 35 years. That suggests an acceleration of an already worrisome trend of declining labor force participation. But take Friday’s numbers with more than a grain of salt.




The labor force is made up of two groups: those with jobs (the employed) and those actively looking for them (the unemployed). In October, the number of unemployed rose slightly, by 17,000, and the number of employed fell sharply, by 735,000. (These are separate figures from the payroll data, which are based on a survey of businesses and told a very different story in October.)

The rise in unemployment was likely due largely to the government shutdown, which left tens of thousands of federal workers and contractors out of work. The number of people on “temporary layoffrose by nearly half a millionfar more than normal — and the number of people unemployed for less tan five weeks rose by 165,000, even as layoffs, as measured by claims for unemployment benefits, remained low. Taken together, those figures suggest that without the shutdown, the number of unemployed would actually have fallen substantially.

The shutdown explains some of the decline in employment, too, though probably not all of it. Unpublished Labor Department data show that federal employment fell by 348,000 in October, without adjusting for seasonal patterns; over the past three years, federal employment has risen by an average of 55,000 in October, though it fell slightly last year. There were unusually large declines in some other sectors that could have been affected by the shutdown, too, such as hospitality and manufacturing, although there’s no way of knowing how much of that was truly tied to the shutdown.

The bigger mystery is the decline in the overall labor force. Furloughed workers should have shown up as unemployed, meaning they would still be counted as part of the labor force. Yet the labor force shrank dramatically. What’s going on? There are three possible explanations:

The shutdown: In theory, the shutdown should have moved people from employed to unemployed, and left the size of the labor force as a whole largely untouched. But reality is more complicated. The jobs figures are based on a mind-bogglingly complex survey of roughly 60,000 households. (How complex? Check out our quiz from earlier this year.)

In a detailed Q&A published Friday, the Labor Department says some people who should have counted as “unemployedshowed up as “employed.” But government economists say it’s possible that some people were misclassified as “not in the labor force,” too, though they say the number was likely small.

Indeed, some 4.3 million people who were employed in September were out of the labor force in October, the largest number since the recession began. There’s no way to break down that data by industry or occupation, but it’s plausible that at least some of them were furloughed workers who were misclassified as out of the labor force.

Noisy data: Economists aren’t kidding when they say to watch the trend, not the monthly figures. The Current Population Survey is big, but it’s measuring an economy that is truly huge, so it’s subject to big margins of errormargins that become bigger the more narrowly you slice the data. And unlike the payroll figures, labor force data doesn’t get revised from month to month.

How noisy is the labor force data? In the first three months of the year, the labor force shrank by an average of 161,000 per month. Over the next three months, it grew by an average of 269,000. The next three months, it shrank again, this time by 92,000 per month. And those are three month averages: The month-to-month data are even more volatile.

A real trend: One trend, however, has been consistent: The labor force has been shrinking as a share of the population for years. Some of that is demographics — the retirement of the Baby Boom generation, in particular — and some is due to the weak recovery, which has led millions of Americans to drop out of the workforce. October marked the 42nd consecutive month that more unemployed people left the labor force than found jobs — indeed, fewer jobseekers found work in October than in any month since May 2008. That suggests the big October drop in the workforce shouldn’t be dismissed out of hand.

In all likelihood, then, the October decline was driven by a combination of factors, with the shutdown muddying already noisy data. Don’t be surprised if next month’s data reveals a reversal of at least some of this month’s decline.

But this much is clear: The American labor force is shrinking, and nothing in Friday’s report suggests that trend has begun to reverse.

 



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