On Friday evening, as I was making dinner and listening to Marketplace, I heard Elaine Chao, Secretary of Labor, make an amazing claim. She stated that the shocking surge in the unemployment rate, to 6.4%, was due to the recovering economy. According to Chao's logic, people were feeling so confident in a turnaround in the economy, that 611,000 workers who had previously given up looking for work were inspired to try again, thus flooding the "labor force", those officially counted as employed or actively job hunting. Having scrutinized the numbers earlier in the day, I knew that while this may have had an inkling of truth, it was for the most part a big fib. So, I went back into the BLS data, and pulled some numbers, listed in the chart below:
| April | May | June | |
| Civilian labor force | 146,473,000 | 146,485,000 | 147,096,000 |
| Change from previous month | 677,000 | 13,000 | 611,000 |
| Not in labor force | 74,067,000 | 74,283,000 | 73,918,000 |
| Change from previous month | -457,000 | 216,000 | -365,000 |
| Unemployed | 8,786,000 | 8,998,000 | 9,358,000 |
| Change from previous month | 341,000 | 221,000 | 360,000 |
| Unemployment rate | 6.0 | 6.1 | 6.4 |
| Discouraged workers | 437,000 | 482,000 | 478,000 |
| Marginally attached to the labor force, but not counted in the UE | 1,400,000 | 1,400,000 | 1,500,000 |
| New teens entering labor force | 147,000 | 20,000 | 10,000 |
Secretary Chao was correct that the labor force swelled by 611K, but it's not exactly clear from whence those numbers transferred. The number of workers "not in the labor force" only decreased by 365,000, even though June is typically when a million or so recent high school and college graduates start job hunting. And where the missing 246K came from, I really don't know, although immigration, retirement from the military, release from institutions, etc., might account for a chunk. But it's pretty clear from which categories those workers did not move; the number of discouraged workers fell by only 5,000, and more importantly, the number of workers "marginally attached to the labor force" increased by 100K. Those are individuals who want to find a job, but for some reason, had not been job hunting in the four weeks preceding the BLS survey. It's also clear that the numbers are not coming from a maturing work force; only 10,000 teenagers, seasonally adjusted, entered the work force, pushing the teenage up to over 19%.
So Secretary Chao can spin, spin, spin those numbers all she wants (and if you watch the tape of her interview on MSNBC/GOP, you'll see the anchor eat the spin up like it was beluga caviar.) But an even cursory look at the number spin a very different tale, one which doesn't bode well for the job market for months to come.
Posted by MB at July 6, 2003 04:44 PM | TrackBack