Jobenomics U.S. Unemployment Analysis: Q2 2015
By: Chuck Vollmer
28 July 2015
Jobenomics tracks both unemployment (Jobenomics U.S. Unemployment Analysis: Q2 2015) and employment (Jobenomics U.S. Employment Analysis: Q2 2015). Download PDF versions at Jobenomics U.S. Employment Analysis- Q2 2015 and Jobenomics U.S. Unemployment Analysis-Q2 2015.
Executive Summary. According to the U.S. Bureau of Labor Statistics (BLS), the U.S. labor force has three statistical categories: Employed, Unemployed and Not-in-Labor Force. Understanding dynamics between these categories is required to understand the current American unemployment situation.
Too much attention is placed on the official unemployment (U3) rate—a rate that is seriously flawed and politicized. Sooner or later, the American people will figure out that it is theoretically possible for the United States to have a zero rate of unemployment while simultaneously having zero people employed in the labor force. The reason for this disquieting statement is due to how the government measures unemployment. To be classified as officially unemployed (U3), one must be looking for work. Able-bodied Americans who quit looking and voluntarily depart the workforce are accounted in a separate category called Not-in-Labor-Force.
The latest BLS Employment Situation Summary reports that over the last month (June 2015) 223,000 Americans entered the U.S. labor force, 640,000 able-bodied Americans quit looking for work and voluntarily departed the labor force (often to some form of public or familial welfare or assistance), for a net workforce loss of 417,000 Americans. The official number of unemployed (i.e., those who continue to look for work) dropped by 375,000, while positive, it did not compensate for the 417,000 people who quit looking for work and joined the Not-in-Labor-Force cadre. Labor force statistics are also shown above covering the last quarter (Q2: April, May, June 2015), the last year, the period since 2010 (the Jobenomics starting point), the start of the Obama Administration in 2009, and the beginning of the 21st Century (year 2000). Since the year 2000, the U.S. labor force lost a net of 13,907,000 workers with 2,646,000 more Americans unemployed today than 15 years earlier. While recent employment and unemployment have shown positive results, these results are more than offset by the number of people departing the U.S. labor force. Over the same period, the U.S. population grew by 39 million people, which places greater financial burdens on employed Americans.
From a Jobenomics perspective, the true unemployment rate is dramatically higher than advertised if Not-in-Labor-Force denizens are included. As of 1 July 2015, the combined number of U.S. unemployed (U3), underemployed (U6) and Not-in-Labor-Force personnel totals 110.1 million Americans, or 34% of the U.S. population (321.2 million), or 70% of the U.S. civilian labor force (157.0 million) as reported by the BLS.
Understanding Employment and Unemployment Statistics. According to BLS, the basic concepts involved in identifying the employed and unemployed are straight forward:
- People with jobs are employed.
- People are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Marginally employed and underemployed personnel, who are actively looking for work, are reported as a subset of the unemployed category, and generally include part-time workers who work less than 35 hours per week.
- Able-bodied adults who are neither employed nor unemployed are not in the labor force. Those who have no job and are no longer looking for a job are counted as Not-in-Labor-Force.
Therefore, as shown:
- Civilian Labor Force = Employed + Underemployed + Unemployed = 158.3 million.
- Not Looking for Work = Not-in-Labor-Force + All Others = 162.9 million.
The Civilian Labor Force is defined as citizens, who are either employed or unemployed looking for a job, are at least 16 years old, are not serving in the U.S. armed forces and are not institutionalized.
- The U.S. government and private sector currently employs 141.8 million people. The four major subcategories are: (1) 22 million federal, state and local government employees and an estimated 10 million contractors who work for the government, (2) 68 million full-time private sector employees, (3) 27 million part-time private sector employees, and (4) 15 million self-employed workers.
- There are 16.5 million unemployed and underemployed people who are looking for work.
The Not Looking For Work group includes those Not-in-Labor-Force and All Others in the U.S. population.
- Not-in-Labor-Force includes people (over 16 years old) such as discouraged workers, citizens who choose not to work, welfare recipients, students, retired, stay-at-home caregivers, etc. There are 93.6 million Not-in-Labor-Force.
- Remaining citizens who are not included in the previous three categories are classified as All Others by Jobenomics (the BLS does not survey and report on these citizens). Jobenomics calculates that this All Others category includes 69.3 million citizens that cannot work (e.g., children, elderly, disabled), are institutionalized or serving in the U.S. armed forces.
Unemployment Rate Categories. Every month, the BLS publishes unemployment and employment statistics. Few policy-makers, opinion-leaders, pundits or citizens truly understand these statistics.
As shown below, six unemployment categories (U1 through U6) are reported monthly by the BLS. Each category requires that an individual must be actively looking for work. These categories are calculated as a percent of the civilian labor force (157,037,000). The BLS also calculates the number of adults (over age 16) that can work but are not looking for work in a category entitled “Not in the Labor Force” (Not-in-Labor-Force).
Americans tend to over emphasize one statistic—the U3 rate or “official” unemployment rate (highlighted in yellow). Following the official U3 unemployment rate, the U1 (long-term unemployed) and U6 (total unemployed plus marginally attached and part-time workers) are the rates occasionally mentioned. The Not-in-Labor-Force category is almost never mentioned in the media or used in policy-making, which is wrong headed from both employment and economic perspectives. The Not-in-Labor-Force (93,636,000) is over 10 times the size of officially unemployed (8,951,109) and exerts much greater strain on the U.S. economy. Not-in-Labor-Force people tend to remain unemployed much longer—often for life. The BLS reports that 94% of Not-in-Labor-Force currently wants a job or desires to be in the U.S. workforce anytime soon.
From a Jobenomics perspective, Not-in-Labor-Force should be classified as Unemployed in the same way that marginalized and underemployed citizens are included in the U4, U5 and U6 categories. The determination whether a person is counted as Unemployed should not depend on subjective, and often whimsical, survey questions that are used to appraise people’s employment intensions. The four survey questions that government interviewers use to record a person as Unemployed include (the bolded words are emphasized when read by the interviewers according to the BLS):
- Do you currently want a job, either full or part time?
- What is the main reason you were not looking for work during the last 4 weeks?
- Did you look for work at any time during the last 12 months?
- Last week, could you have started a job if one had been offered?”
If a person answers yes to all four questions, that person is considered Unemployed. If the answer is no to any of these questions, that person is enrolled in the Not-in-Labor-Force category.
Sooner or later, the American people will figure out that the current way our government calculates unemployment is seriously flawed. Under the current system, it is theoretically possible for the U.S. to have a zero rate of unemployment while simultaneously having zero people employed in the labor force. Since Not-in-Labor-Force personnel are not counted as Unemployed, the official unemployment rate could theoretically be zero if all current unemployed or underemployed people simply quit looking for work and joined those in the Not-in-Labor-Force.
Jobenomics contends that all able-bodied Americans who can work but don’t work, regardless if they are looking or not, should be considered as Functionally Unemployed. Functional is defined as capable of operating or working. An able-bodied adult who is capable of working but chooses not to work should be considered unemployed for the same reason that “discouraged”, “marginally attached” and “part-time workers for economic reasons” are included in the U4, U5 and U6 categories.
If the Not-in-Labor-Force cadre is added to the U6 mix as a percentage of the civilian labor force, the U6 rate would rise to 70%, which is substantially higher than the current U6 rate of 10.5%, or the U3 rate of 5.3%. If calculated against the entire U.S. population, the combined rate would be 34%, which is still significantly higher than advertised unemployment rates. Jobenomics contends that all employment and unemployment calculations should be made against the entire U.S. population (321,230,000) as opposed to ambiguous metrics like the Civil Labor Force (157,037,000) or Civilian Noninstitutional Population (250,663,000).
Calculating and reporting on Functional Unemployment would provide policy-makers and the American public a better perspective on labor force participation, employment-population statistics, tax revenue generation, and entitlement/welfare program expenditures. Understanding of the impact of the functionally unemployed would have equipped U.S. policy-makers with much better insights regarding economic recovery efforts during and after the Great Recession of 2008/09.
During and after the Great Recession, policy-makers focused almost entirely on U3 metrics rates and numbers of officially unemployed. The Great Recession cost the United States 8.7 million jobs that have been slowly recovered over the last five years with a net gain of several million jobs (see Jobenomics U.S. Employment Analysis: Q2 2015). While this is good news, these statistics do not tell the complete story. The overall U.S. labor force has not improved, but is weaker by 3.8 million due to the functional unemployment factor.
As shown above, shortly after the Great Recession, the U3 rate reached its peak at 10% in October 2009. Since then, the U3 rate has dropped to 5.3%, which represents 7.1 million less unemployed Americans—seemingly good news. During the same period, 10.9 million citizens voluntarily departed the work force—many to the netherworld of perpetual unemployment and welfare. Consequently, while America decreased its number of unemployed by 7.1 million, it increased the number of its non-working, able-bodied, adults by 10.9 million, for a net loss of 3.8 million employed workers—not good news. From an overall labor force perspective, the U3 rate is a relatively poor indicator and undeserving of the amount of attention it receives.
Functional unemployment comparisons from the start of the 21st Century are equally troubling. As shown above, labor force trends since year 2000 indicate that in terms of percentages, the number in the Not-in-Labor Force grew almost as fast as the number of officially unemployed (36% versus 47%) and over three times as fast as employment growth (11% versus 36%). In terms of raw numbers, the comparisons are quite stark. The number of U3 unemployed citizens increased by 2.6 million people compared to employment growth of 14.2 million and Not-in-Labor-Force growth of 25.0 million. Jobenomics projects that this trend will continue unabated in the foreseeable future.
Comparing the size of the Not-in-Labor-Force to the private sector labor force increases the disparity even further (36% versus 9%, or 25.0 million versus 9.7 million). This comparison is important since the private sector workforce provides the bulk of U.S. employment, tax revenue and social subsidies (healthcare, training, etc.). If current trends continue, the Not-in-Labor-Force will exceed the private sector labor force by 2023.
According to BLS data, those in the Not-in-Labor-Force category (those that can work but don’t) has surged consistently since year 2000 by 25.0 million people. Since 2009, the start of the Obama Administration, it grew by 13.2 million. Since 2010, the beginning of the decade, it grew by 9.8 million people. Last 12 months, last quarter and last month Not-in-Labor-Force grew by 1.5 million, 451,000 and 640,000 people, respectively.
A major reason for Not-in-Labor-Force category growth is due to the growing attractiveness of welfare and entitlement benefits. While there is no evidence that people on welfare are lazy or immune to work, there is evidence that many welfare recipients lack the skills necessary to obtain the types of jobs that pay above-average wages, which, in turn, makes welfare an attractive option. According to a 2013 CATO Institute study, “the current (U.S.) welfare system provides such a high level of benefits that it acts as a disincentive for work.”
The U.S. federal government funds 126 separate programs targeted at low-income people. State, county, and municipal governments operate additional welfare programs. Combined welfare benefits pay more than minimum wage jobs in 35 states—in many cases, significantly more. For example, according to the CATO study, one would have to make more than $60,000 (pretax wage equivalents) in Hawaii and more than $50,000 in Washington DC and Massachusetts to beat the level of welfare payments.
According to the latest (2012) U.S. Census Bureau data, 308,983,190 payments were made to U.S. welfare recipients out of total U.S. population of approximately 309.5 million Americans. 153,323,310 Americans received benefits from one or more programs, which equates to half of the U.S. population. As listed in the chart, 200,256,360 Americans receive some form of social welfare, social insurance, or “means-tested” welfare benefits. This does not including other government means-tested benefits like the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), Alternative Minimum Tax (AMT) rebates and Education and Tuition Assistance programs. Nor does it include social expenditures for Affordable Care (Obamacare), tuition assistance, unemployment insurance, housing assistance and long list of other means-adjusted programs.
While it is difficult to calculate total expenditures, it is estimated that U.S. taxpayers pay over $3 trillion annually for welfare benefits. Antidotal evidence supports $3 trillion per year including $927 billion for 79 means-tested programs (2011), $785 billion for Social Security OASDI (2013), and $574 billion for Medicare (2013). This massive amount of disbursements has created a public assistance industry characterized by 1.5 million U.S. public charities, private foundations and nonprofit organizations dedicated to maximizing unemployment, entitlement and welfare benefits. These nonprofit organizations yield tremendous social and political power that will continue to fuel the growth of entitlement and means-tested welfare programs, which in turn will fuel Not-in-Labor-Force growth.
Another major reason for Not-in-Labor-Force growth is due to the growing number of postsecondary school students. Jobenomics endorses postsecondary education, but for the right reasons and right job. However, many students use college loans as a form of social welfare attending college for wrong reasons, such as, parental or peer pressure, getting a high paying job, enjoying the college scene, or delaying the drudgery of the labor force. According The Center for College Affordability and Productivity, about half of employed college graduates are in jobs that the BLS suggests requires less than a four-year college education.
Postsecondary school students account for 22% of today’s Not-in-Labor-Force. According to the U.S. Department of Education, total undergraduate enrollment in degree-granting postsecondary institutions was 17.7 million in fall 2012, an increase of 48% from 1990. By 2023, undergraduate enrollment is projected to increase 14% to 20.2 million. Total enrollment in post-baccalaureate degree programs was 2.9 million in 2012, an increase of 57% since 1990. Post-baccalaureate enrollment is projected to increase 24% to 3.6 million by 2023. If these projections are correct the postsecondary school component of the Not-in-Labor-Force will increase by 3.2 million by 2023. Hopefully, these individuals only will be temporarily absent from the U.S. labor force and meaningful employment opportunities will abound when they graduate.
Not all degrees are created equal. According to a Georgetown study, the risk of unemployment among recent college graduates depends largely on their major. Entry-level salaries for many graduates (such as those majoring in art-related career fields) are $30,000, which less than what they can get on welfare in HI, DC, CT, NJ, RI, VT, NH, MD, CA, WY, OR, MN, NV, WA, ND, NM, DE and roughly equal to benefits provided by a dozen other states. The Georgetown study cautions students to seriously weigh the benefits verses the costs. In 2013, the average student loan debt was $30,000, but with rising tuitions, $50,000 is a more reasonable figure for future graduates. Many students have a laissez-faire attitude about paying off loans or expecting loan forgiveness. Unfortunately, the phenomenon of compound interest also works on student loans. Unpaid $30,000 loans can compound to double or triple the original amount. For those expecting a federal government loan forgiveness program, they should be cautious. Outstanding student loans now top $1.2 trillion. Given the $18 trillion national debt, fiscally conservative lawmakers are unlikely to forgive much, regardless of the debt-forgiveness rhetoric of more socially-minded politicians.
In terms of demographics, the Not-in-Labor-Force includes 52 million people 55 years or older (56.8%), 24 million 25-to-54 year olds (26.2%), and 18 million 16-to-24 year olds (17.0%). In terms of gender, Not-in-Labor-Force includes 56 million women (60.4%) and 38 million men (39.6%). Recent trends have been most unfavorable to those over 55 years old, who once out of work tend to stay permanently out of work.
Labor Force Participation. Another way to look at the unemployment situation is via the BLS Labor Force Participation Rate and the BLS Employment-Population Ratio.
The labor force participation rate is the percentage of working-age persons who are employed or unemployed but looking for a job in the Civilian Labor Force. The U.S. labor force participation rate suffered a serious decline from a high of 67.3% in January 2000 to 62.6% today—a net 7.0% decline from peak and a low that has not occurred since October 1977. Today’s labor force participation rate would be much lower if not for working women who did not participate in the U.S. labor force in 1977 as they do today. The primary reason for the dramatic drop in the labor force participation rate is largely due to those that simply have quit looking for work and are now categorized as Not-in-Labor-Force.
The American workforce is getting grayer. Economic uncertainty is keeping older Americans on the job and delaying retirement. As shown above, the BLS projects that the percentage of older Americans in the U.S. labor force will increase 40% from 1990 to 2020 while the percentage of younger Americans, aged 16 to 24, will shrink by 25%. Data also shows that once older workers are out of work, they have a much harder time finding employment than a younger worker.
The BLS’s Employment-Population Ratio is another statistic that is not widely used, but is very useful in a strategic context. This ratio answers the question, “what portion of the working-age population is employed?” and is useful in understanding how our economy is performing. The BLS defines this ratio as the proportion of the civilian noninstitutional population aged 16 years and over that is employed. The civilian noninstitutional population includes the Employed, Unemployed (U6) and Not-in-Labor-Force categories. It does not count the All Others group who cannot work, are institutionalized or serving in the U.S. armed forces.
The Employment-Population ratio is the proportion of the civilian noninstitutional population (250,663,000 as opposed to the total U.S. population of 321,230,000) of adults (16 years and over) that are employed (148,739,000) as determined by the monthly Current Population Survey conducted by the Census Bureau for the BLS. The civilian noninstitutional population is comprised of citizens in the civilian labor force and the Not-in-Labor-Force BLS categories.
As of 1 July 2015, the U.S. Employment-Population ratio was 59.3%. From its peak in April 2000, the U.S. Employment-Population ratio has declined 8.3% due to slow employment growth relative to rapid growth in unemployment (U6) and Not-in-Labor-Force since the turn of the century. As mentioned earlier, Jobenomics advocates calculating the Employment-Population ratio on total population rather than the civilian noninstitutional population in order to better understand the increasing tax and familial burdens placed on working-class Americans.
From an unemployment perspective, what really matters is how many people are entering the U.S. labor force as opposed to leaving. The number of unemployed is dependent on labor force gains and losses. Focusing solely on the unemployment rate is like treating a symptom rather than the disease.
According to Bureau of Labor Statistics (BLS) data, last month 417,000 more people departed than entered the U.S. labor force, which negated the decline in number of unemployed (375,000). Q2 2015 (April, May, June) produced better results with a total of 477,000 people entering the U.S. labor force and 451,000 voluntarily departing, for a small net gain of 26,000, but with a large reduction in unemployment (276,000). Since the beginning of the Obama Administration, net workforce losses (6,177,000) were about double the reductions in unemployment (2,987,000). In other words, since the President took office approximately 3 million people are no longer on the rolls of unemployment rolls (good news) while approximately 6 million departed the workforce (bad news)—many of whom were previously classified as unemployed but are now in the Not-in-Labor-Force since they quit looking for work. At least one of the two trends was good during the Obama Administration. If one looks at the data since year 2000, both trends are bad—net labor losses are approximately 14 million and the unemployment rolls swelled by 2.6 million.
According to the most recent BLS Job Openings and Labor Turnover Survey (JOLTS), there are 5,430,000 job openings in the United States. The JOLTS report calculates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and geographic region. As shown, the four occupations that have the largest number of openings are: Professional & Business Services (1,099,000), Healthcare (865,000), Accommodation & Food Services (687,000) and Retail & Wholesale Trade (739,000). State and local government have 464,000 openings that are likely to remain unfilled due to budget constraints. The primary reason for the large number of private sector job openings is due to the lack of job skills. The secondary reason is due to economic uncertainty. From a Jobenomics perspective neither reason is likely to be change in the near-term and the flow of disgruntled worker will remain unabated into the Not-in-Labor-Force.
Small Business Creation Solution. The only true way to reduce unemployment and reduce the numbers of Not-in-Labor-Force personnel is to create net new businesses and jobs tailored to corporate realities and the needs of a transforming workforce.
Jobs do not create jobs, businesses do, especially private sector small businesses. American small businesses (less than 500 employees) employ 77.9% of all Americans and created 78.7% of all new jobs this decade. Last month, small businesses created 86.7% of all new jobs. Small businesses are important from a long-term unemployed and part-time worker point-of-view, both of whom face employment challenges. Small businesses tend to hire these demographics at a far greater rate than large businesses that can be choosy about whom they hire. It is a well-established fact that large corporations tend not hire formerly unemployed workers but give preference to hiring employed workers from other organizations.
Large businesses historically have been the mainstay for U.S. jobs. However, this fact is changing due to global competition, outsourcing, economics, automation and labor force transformation. Large businesses (greater than 500 employees) have downsized by 2,634,000 employees this decade, whereas small business (less than 500 employees) have increased employment by 9,714,000 this decade. Nonetheless, Jobenomics is a big business advocate and is endeavoring to provide labor force insights and economic trends that will assist in their resource decision-making. A strong industrial base is paramount to economic security.
Today, small businesses employ more than 5 times as many workers than large corporations (1000+ employees). Even U.S. micro and self-employed businesses (less than 19 employees) employ 69% more workers than large corporations (31 million versus 18 million). Contrary to popular opinion, 50% of all small business startups last five years and 30% remain in business over ten years. In addition, small business growth has outperformed medium and large businesses during the recovery from the Great Recession. A strong small business sector is of paramount importance in supporting big business as well as government. The more people small businesses can employ means less personnel issues that big business and government have to handle—thereby allowing them to focus on more strategic matters like economic and national security.
Federal, state and local governments can also create jobs, but the likelihood of increased government employment is limited considering the current political and fiscal environment. Even with profligate government spending after the Great Recession, net new government jobs are down by 572,000 employees. Spending on infrastructure projects is a popular opinion, but infrastructure spending is also limited by budget constraints and the jobs they produce (mainly construction) are temporary in nature. Notwithstanding, government can play a large role in business creation by the policies and incentives they promote and support. For example, America’s electrical grid requires approximately $2 trillion to modernize and protect. Rather than restoring a 50-year old electrical infrastructure, government could empower businesses to create a new distributed and dispersed point-of-use power generation systems that would create millions of local, middle-class jobs via emerging renewable (such as solar, wind, geothermal and high-head hydro) and cleaner fossil fuel (such as natural gas) technologies.
Jobenomics asserts that the solution to growing America’s economy involves putting our small business engine into over-drive. Energizing existing small businesses and creating new small and self-employed businesses could create over ten million of new jobs within a decade. To prove the validity of this assertion, Jobenomics is working with a number of U.S. cities to implement Jobenomics Community-Based Business Generators to create thousands of startup small businesses. The objective of a Jobenomics Business Generator is to increase “birth rates” of startup businesses, extend the “life span” of fledgling businesses and increase the number of employees per business.
Approximately 15 million Americans, or 1 out of every 8 people in the private sector labor force, are self-employed in either incorporated or unincorporated businesses. This number has remained relatively stable since the year 2000. With a little encouragement, training and financial support, this number could easily double or triple in the next decade.
The number of U.S. part-time workers has grown 19% since year 2000 to 27,667,000 in July 2015, which is near the all-time high of 28,134,000 in July 2013. Part-time workers are a large component of a much larger group of workers, called contingency workers.
The U.S. labor force is transforming from full-time to contingent workers. The contingent workforce is comprised of part-time workers (temporary contract workers, seasonal workers, etc.) and the self-employed (consultants, independent contractors, independent professionals, freelancers, etc.).
Contingency workers (self-employed and contract workers) currently represent slightly over 30% of the U.S. workforce and are projected to increase substantially. According a Bloomberg Businessweek, contingency workers could represent 40% of the U.S. labor force in 2020. Jobenomics believes that contingent work could become the dominant (over 50%) form of labor in the U.S. workforce in the near future given current trends in labor force gains and losses, technology and ethnology (cultural dissimilarities with new labor force entrants).
- In regard to labor force gains and losses, America needs to reverse the trend of able-bodied Americans voluntarily leaving the labor force to the netherworld of perpetual world of unemployment and welfare. The place to start is with the 5 million unfilled job openings that are available today. Since corporations are leery of hiring full-time employees in an uncertain economic environment, Jobenomics contends that mass producing micro-businesses is a way to respond to open full-time jobs using part-time contingent workers.
- In regard to technology, two major technological revolutions are occurring today: Energy Technology Revolution (ETR) and Network Technology Revolution (NTR). Like the Military Technology Revolution did in the post-WWII era, and the Information Technology Revolution did in the 1990s, the ETR and NTR can produce tens of millions of net new U.S. jobs and potentially hundreds of millions globally in the next several decades.
- The Energy Technology Revolution’s (see: http://jobenomicsblog.com/energy-technology-revolution/) technologies, processes and systems are dramatically changing the global energy mix. Driven by global climate change, renewable energy and growing demand in emerging economies, the appetite for clean and affordable energy has never been higher. These jobs will be produced with a lot of churn. Existing energy companies will become more efficient, requiring fewer workers. More importantly, energy generation is shifting from centralized power generation to decentralized, point-of-use systems that are not only more efficient but has the potential to create millions of local small businesses. New technologies will create major new markets and employment opportunities. Countries that have an ETR strategy will claim the bulk of these new jobs. While the U.S. is in the forefront in the ETR, it lacks an overall strategy from a business and jobs creation perspective.
- The Network Technology Revolution (see: http://jobenomicsblog.com/network-technology-revolution/) is characterized by a perfect storm of highly advanced technologies, processes and systems, including big data (zettabytes of data stored in “clouds”), semantic webs (thinking websites), machine learning (systems that can learn from data), mobile robotics (automated machines capable of movement), ubiquitous computing (embedding microprocessors in everyday objects to communicate information without requiring human interaction), national broadband system (bringing high-speed networks to everyone ), the “Internet of Things” (a world where more things are connected to the Internet than people), all of which will be imbued or controlled by some degree of artificial intelligence (AI) agents. The more creative the NTR becomes the more destructive it will be. According to the Oxford University study on computerization “about 47% of total U.S. employment is at risk” over the next two decades. If Oxford’s estimates are correct, up to 67 million U.S. jobs could be at risk. With a proper national strategy (that currently does not exist), the NTR can replace jobs lost to automation via the creation of millions of new small business and tens of millions of jobs, especially for the growing contingent workforce as well as stemming the flow of discouraged workers to the Not-in-Labor-Force.
- In regard to ethnology, 154 million NTR-savvy “Screenagers” (Generation Z, born 1996 to present, now 19 years old and younger) and “Millennials” (Generation Y, born 1980 to 1995, now ages 20 to 35) generally prefer contingent work over traditional full-time occupations. 61% of Millennials still at “regular” jobs want to quit within two years and be entirely independent. 72% of surveyed Screenagers want to start their own business. While much of this is wishful thinking, the ETR and NTR will provide many of these Millennials and Screenagers with business and nonstandard employment opportunities that will make many wishes come true.
Contingent work is called “nonstandard work arrangements” by the federal government, which will be a misnomer if contingent work becomes the dominant form of employment. Government will try to keep this from happening to keep the onus on big business to produce payroll taxes and provide social benefits. In the end, government will fail to keep the U.S. labor force from rationalizing. During the rationalization process, contingency workers will organize in ways that maximizes earnings, benefits and retirement. Jobenomics predicts that micro-tasks, micro-jobs, micro-businesses will be created to service this need. Unbeknownst to most policy-makers and opinion-leaders, this is already happening and growing at spectacular rates.
Amazon, eBay and PayPal are American iBusiness anchor tenants. Founded in 1994, Amazon is now the largest internet-based retailer in the United States and is the world’s largest provider of cloud computing services. Amazon’s cloud computing and web services for startups have yielded success stories like Airbnb, Yelp and Spotify. Founded in 2008, Airbnb is a trusted marketplace for people to list and rent unique accommodations that served over 40,000,000 guests in 34,000 cities in 190 countries. Founded in 1995, eBay specializes in online shopping sites for major brands as well as the contingency workforce. eBay’s online enterprise consists of 25 million sellers, 800 million live listings, and 157 million active buyers. Founded in 1998, PayPal specializes on online payments, money transfers and lending with 169 million active accounts that use 26 different currencies in 203 markets worldwide. PayPal has extended loans to 40,000 businesses worldwide with emphasis on micro-businesses that need loans up $85,000.
Empowered by iBusiness, the micro-workforce is replacing full-time employees at greater and greater rates. Some of the emerging U.S. iBusiness companies that focus on the contingent workforce include Amazon Mechanical Turk (specializing in micro-tasking with an average over 200,000 short term job taskings each day), FlexJobs (specializing in telecommuting and flexible jobs), oDesk (specializing in micro-jobs related to computer programming, software and web development), ClickWorker.com (specializing in part-time jobs of data entry, translation and writing articles), Fiverr (specializing in allowing people to create businesses out of their hobbies) and Guru.com (specializing in jobs for freelances).
Many more iBusinesses are starting in the United States and internationally. Alibaba, a Chinese new start in 1999, is now the world’s largest e-commerce iBusiness supporting 10 million small businesses with gross merchandize sales of approximately $400 billion. In 2015, Alibaba’s Wall Street IPO (initial public offering) was one of the largest in U.S. history. Competition for domestic and global iBusiness will be fierce.
Micro-tasking and micro-jobs will likely play a much larger role in business and national economies than ever before. Jobs will increasingly be dissected into discrete tasks, which, in turn, will be addressed by temporary collectives and virtual organizations. Collaborative and management tools will create “contextual” work environments that rapidly form, perform, and then reform to address subsequent tasks. More and more brick and mortar enterprises will give way to remote businesses (home based, mobile and telecommuting businesses) that can compete with equal efficiency at lower costs.
Jobenomics envisions a time in the not too distant future, where major corporations will operate with a small cadre of full-time employees that manage: (1) a network of strategic partners and international businesses, (2) a large and disparate contingent workforce, and (3) an automated infrastructure controlled by AI (artificial intelligent) agents. The time to prepare is now to minimize domestic workforce departures and maximize employment opportunities for a nontraditional labor force that can compete globally.
In conclusion, the chart puts the current U.S. unemployment and employment situation in perspective based on the American society as a whole.
Out of a population of 321 million citizens, only 34% of all Americans are financially supporting the rest of the country. The U.S. economy cannot be sustained by 34% supporting an overhead of 66%. More people must be productively engaged in the private sector labor force for the U.S. economy to flourish.
As of the end of Q2 2015, the U.S. has 110 million private sector workers that support 32 million government workers and contractors, 17 million total unemployed (U6 rate), 94 million able-bodied people who can work but chose not to work, and 69 million who cannot work. Of the 110 million employed Americans, approximately 68 million people work full-time, 27 million people work part-time and 15 million are self-employed. Consequently, 30% of all Americans work in what is called the contingent workforce that will likely grow to 50% in the near future based on current labor force, economic, technical and cultural trends. It is imperative that U.S. policy and decision-makers plan for the challenges of a rapidly changing workforce that is transforming from full-time to contingent workfare. From a Jobenomics perspective, small and micro business creation is the best way to accommodate this change.
Business and jobs creation is the number one issue facing U.S. economic prosperity. Jobenomics believes that new small, emerging and self-employed businesses could create 20 million new jobs within a decade, if properly incentivized and supported. Three prominent areas to focus are: filling 5 million unfilled U.S. job openings, and exploiting the opportunities in the emerging Energy Technology and Network Technology Revolutions, both of which have the potential of creating 10s of millions of new jobs. Jobenomics is focused on four demographics with the highest need and growth potential including: Generation Y-owned businesses, Women-owned businesses, Minority-owned businesses and Veteran–owned businesses. Jobenomics is also working on urban mining of high-value electronic waste to fund Jobenomics Community-Based Business Generators that are designed to mass produce inner city small and self-employed businesses.
If Jobenomics can help create thousands of highly-scalable small businesses, America writ-large can facilitate the creation of millions of small businesses that would transform our economy.
 CATO Institute, The Work Versus Welfare Trade-Off: 2013, http://object.cato.org/sites/cato.org/files/pubs/pdf/the_work_versus_welfare_trade-off_2013_wp.pdf
 U.S. Census Bureau, Economic Characteristics of Households in the United States, Table 2: People by Receipt of Benefits from Selected Programs: Monthly Averages: 4th Quarter 2012 (retrieved 13 July 2015), http://www.census.gov/programs-surveys/sipp/publications/tables/hsehld-char.html
 The Heritage Foundation, Examining the Means-tested Welfare State: 79 Programs and $927 Billion in Annual Spending, 17 April 2012, http://budget.house.gov/uploadedfiles/rectortestimony04172012.pdf
 Note: As of 2013, the U.S. has 1,527,525 registered nonprofit organizations. For a complete list see the National Center for Charitable Statistics, http://nccsweb.urban.org/PubApps/profile1.php?state=US
 The Center for College Affordability and Productivity, Underemployment of College Graduates, January 2013, http://centerforcollegeaffordability.org/research/studies/underemployment-of-college-graduates/
 Georgetown Center on Education and the Workforce, Hard Times: College Majors, Unemployment and Earnings: Not All College Degrees Are Created Equal, http://www9.georgetown.edu/grad/gppi/hpi/cew/pdfs/Unemployment.Final.pdf
 ADP Research Institute, Historical Data, http://www.adpemploymentreport.com/2015/March/NER/NER-March-2015.aspx
 For more detail see Jobenomics U.S. Employment Analysis: Q2 2015
 Bloomberg Businessweek, 20-25 October 2014 Edition, Companies/Industries, Page 20
 Oxford University, The Future of Employment: How Susceptible Are Jobs To Computerization?, 17 Sep 2013, http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdfhttp://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf
 Ryan Jenkins Next Generation Catalyst, 7 Emerging Millennial and Generation Z Trends For 2015, http://ryan-jenkins.com/2015/02/05/7-emerging-millennial-and-generation-z-trends-for-2015/ , and Global Messaging, Beyond Facebook: How to Market to a New Generation, https://www.globalmessaging.co.uk/index.php/beyond-facebook-market-new-generation/