There’s a lot of talk about the economy and unemployment levels. Depending on who you listen to, you will hear the economy has turned around and is starting to improve or the economy is in a downward spiral and getting much worse. The truth is much more complicated.
The reports can be confusing, especially if you only read the headlines. For example, the most recent report showed a drop in unemployment, from 9.5% to 9.4%. The same report showed the number of jobs in the economy decreased by 247,000. So, how can we have less jobs and lower unemployment? A big reason for this is the season adjustment to the figures. The government adjusts employment data based on normal seasonal changes.
Looking at the unadjusted figures paints a clearer picture. Below are the unadjusted numbers for May, June and July (in thousands):
Between May and July, the workforce grew by 1.9 million people. Much of this is a result of students graduating and entering the workforce. During this time, the number employed also grew, with 692,000 jobs added. This lead to an increase in the number unemployed, as the number of new workers vastly exceeded the number of new jobs.
So, how could we added so many jobs at a time when the government is reporting job losses? The government adjusts for seasonal changes. For examples, many companies in the tourism industry add summer help, and then eliminate the same positions in the fall. Ordinarily, these companies would have hired a lot of more people. After adjusting for the typical summer hiring, we have had a loss in jobs.
Is the economy improving? The number of people employed hit a bottom in March and has improved since then, with over a million more people employed in July compared to March. During this same time, the number of people unemployed increased by 2 million. Employment is increasing but at a slower rate than the workforce. You can use these stats say the economy is getting better or worse. Add in the seasonal adjustments and you can paint any picture you want.
The overall numbers are good to know, but what is really important is the affect on individuals. Are people able to find jobs?
The most disturbing statistic is the number of discouraged workers. A discouraged worker is a person who wants a job but has given up and stopped looking. The government removes this person from total workforce. Over the last ten years, we have averaged around 400,000 people who are discouraged. In July, this total reached 796,000, almost 400k more than normal.
If you are discouraged, frustrated and can’t find a job, giving up may be tempting. There are nearly 800k people who have done just that. The economy is tough and jobs are scarce, but there are jobs. Maintaining a positive attitude and working hard in your job search are the keys to success. It isn’t easy, but it is essential.