This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

A Serious Degradation in Employment

The latest employment report from the U.S. Department of Labor shows further degradation of the employment picture. Here's the short list of bad news items:

  • The civilian labor force declined by a whopping 571,000 to September from August.
  • Employment declined even more, by 785,000.
  • Unemployment increased by 214,000.
  • Total nonfarm payroll jobs lost increased by 62,000 to 263,000.
  • The number of people of employment age not in the labor force increased by 807,000.
  • The official unemployment rate, or U-3, increased to 9.8% from 9.7%.
  • The average private work week declined to tie a record low of 33 hours in September, equaling June.

Are there any exceptions to the bad news? Here are a couple of positives:

  • Average weekly earnings were essentially unchanged to September from August and up slightly (up 0.5%) from the average for May, June and July.
  • Total nonfarm payrolls declined by only 37,000 from the July level and 60,000 from the average for May, June and July -- a second derivative improvement.

Shrinking Labor Force

Just two weeks ago, I reviewed the shrinking labor force in an article for TheStreet.com. The size of the problem has doubled the recent previous decline, with a September loss in the civilian labor force of more than half a million. This is an historic decline, reflected in the following graph, with more than 1 million people disappearing from the labor force in just four months.

Civilian Labor Force Change (Y-over-Y)
CL chart
Source: U.S. Dept. of Labor

Alternative Measurements of Unemployment

I proposed that employment and unemployment should be measured against full-time employment being a 40-hour work week. Thus, if someone is working 32 hours a week, he should be counted as 80% employed; a 20-hour week would constitute 50% employment. An exception in this methodology is that anyone working part-time by choice will be counted as one employed person. The Labor Department counts all of these as one employed person, which overstates the size of the employment market.

The Labor Department reports several measurements of unemployment, the most common being the U-3 metric. Many also look at the so-called "underemployment" number, or U-6, which attempts to include some of the discouraged without work who aren't currently counted in the labor force, as well as some effects of part-time employment. The unemployment number I proposed corresponding to U-3 has been labeled U-7, and corresponding to U-6 has been called U-9. These numbers are summarized in the following table.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $124.24 0.00%
FB $83.01 0.00%
GOOG $555.17 0.00%
TSLA $190.41 0.00%
YHOO $44.47 0.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs