Jobenomics U.S. Employment Analysis: Q1 2016
By: Chuck Vollmer
Contact information: email@example.com
Download complete report 58 page report:
20 April 2016
Jobenomics reports on U.S. employment and unemployment size, characteristics and trends. This Employment Analysis focuses on the U.S. labor force, business and job creation, and transformative trends—with emphasis on the 60 million workers in the rapidly growing, and under reported, contingent workforce. The companion Unemployment Analysis focuses on how the U.S. government reports on unemployment and income statistics, why Americans who can work chose not to work, and the impact of 109 million non-working able-bodied citizens are having on the United States.
While recent U.S. labor force employment and unemployment trends have been positive, these trends are offset by the exodus of millions of able-bodied citizens voluntarily departing the workforce—many to welfare or alternative lifestyles. The U.S. labor force is also undergoing a major transformation from traditional full-time employees to contingent (part-time and self-employed) and task-oriented workers—a transformation that is not understood by policy-makers or the American public. In order for the U.S. labor force and economy to prosper, much greater attention needs to be given to small business and job creation.
In April 2016, the U.S. Bureau of Labor Statistics (BLS) Employment Situation Summary reported that 215,000 Americans entered the U.S. labor force on a seasonally adjusted basis. The BLS also reported that 206,000 fewer able-bodied Americans were recorded in the BLS “Not-in-Labor-Force” category, for a net workforce gain of 421,000 Americans. Over the last quarter (January, February and March), a total of 628,000 people entered the labor force and 621,000 fewer citizens departed, for a net gain of 1,249,000 people in the labor force. Consequently, Q1 2016 was very positive for the U.S. labor force. Labor force statistics are also shown covering the last year, the period since year 2010 (the Jobenomics starting point), since 2009 (the start of the Obama Administration) and since 2000. Since 2000, the U.S. labor force has suffered a net loss of 11,833,000 workers, not counting the number of unemployed (2.3 million more people are unemployed in 2016 than 2000) and 42 million additional Americans due to population growth. In summary, Q1 2016 and several of the preceding quarters have made significant positive gains towards economic recovery. However, there is still a long and difficult financial road ahead to recover from the labor force losses in the 2000s and to adequately prepare for the next financial crisis.
The United States consistently produced tens of millions of new jobs for six consecutive decades from the 1940s through the 1990s. The bottom fell out in the decade of the 2000s with a net loss of 1.2 million jobs. Consequently, it is critical that a significant number of new jobs are created this decade (2010s) for the U.S. economy to prosper.
20 million net new jobs per decade is a goal that has been historically achieved. It is also the number needed to accommodate new labor force entrants, a growing population, and maintaining an unemployment rate of 5%, which is considered a normal rate of unemployment. U.S. employment increased by 13.6 million so far this decade, which is positive, but is still a 21% shortfall in the number of new jobs needed to produce 20 million new jobs by 2020. From a labor force perspective, employment gains are only half the solution for prosperity. The other half deals with mitigating labor force losses that are examined in detail in the companion Jobenomics Unemployment Analysis.
Over the last four decades, the United States suffered a serious reversal in the number of job gains compared to job losses. In the 1980s and 1990s, by a factor of almost 5:1, more workers entered the U.S. labor force than departed. From 2000 to 2010, the U.S. workforce not only shrank by 1.1 million workers but 15.2 million able-bodied adults left the labor force, for a net total of 16.3 million workers. Hemorrhaging of 16.3 million workers was largely due to two recessions, the 2001 Recession caused by the collapse of the dot-com bubble and the 2007-2009 Great Recession precipitated by the sub-prime mortgage crisis. From 2010 to 2016, labor force gains and losses have been relatively equal with 13.6 million gains and 10.3 million losses. Based on current trends, Jobenomics projects 22.6 million new workforce entrants versus 17.2 voluntary departures for a net labor force gain of only 5.4 million during the remainder of this decade. This meager net gain is insufficient to grow the economy and reverse the decline in the American middle-class. In addition, this meager net growth occurred in a period free of a major domestic financial crisis or recession.
Since the 1940s, the U.S. economy has averaged 3 financial crises and 1.7 recessions per decade. Unlike many parts of the world, the United States has been recession free for two major reasons. First, the U.S. federal government and the U.S. Federal Reserve (central bank) infused over $17 trillion dollars’ worth of stimuli and incentive programs into U.S. major financial institutions and corporations since the Great Recession. Second, compared to other economies, the relative strength of the U.S. economy continued to attract foreign investment. Unfortunately, both of these reasons may run their course and the likelihood of a U.S. recession within the next few years is relatively high. A recession would not only impact the U.S. economy, but would cause a significant setback, or a U-turn, to recent U.S. labor force gains.
Today, 34% of all Americans financially support the rest of the country. Out of a total population of 323 million Americans, 112 million private sector workers support 32 million government workers and government contractors, 94 million able-bodied people who can work but chose not to work, 70 million who cannot work (caregivers, children, retired and institutionalized citizens), and 16 million unemployed and underemployed.
The growing contingent labor force, which consists of lower paid wage earners, makes the overhead burden even more precarious. More people with livable wages and greater discretionary income must be productively engaged in the private sector labor force for the U.S. economy to flourish. Of the 112 million workers in the private sector labor force, 70 million individuals work full-time, 26 million are part-timers (less than 35 hours per week) and 15 million are self-employed. The 41 million part-time and self-employed workers are part of the ever-growing contingent workforce that likely to be as high as 60 million people today and 80 people by 2030.
By 2030, or sooner, Jobenomics forecasts that contingency workers will be the dominant (over 50%) component of the U.S. workforce. This forecast is based on seven factors: (1) increasing labor force losses versus labor force gains, (2) adverse corporate hiring and employment practices, (3) revolution in energy and network technologies, (4) automation of manual and cognitive jobs, (5) impact of the emerging digital economy, (6) shift from full-time, to part-time and task-oriented labor, and (7) cultural differences of new labor force entrants.
The U.S. economy cannot be sustained by 34% supporting an overhead of 66% as well as the growing contingent labor force that is replete with lower paid wage earners. More people with livable wages and greater discretionary income must be productively engaged in the private sector labor force for the U.S. economy to flourish. Job creation involves business creation, especially small business creation.
So far in this decade, U.S. small businesses (less than 500 employees) produced 79% of all new jobs. Today, small businesses employ 78% in the U.S. private sector with a total of 95.0 million employees, which is over 3.5 times the amount of large corporations with 500+ employees. Equally important, micro businesses with less than 19 employees employ 69% more than major corporations with 1000+ employees. Without a viable small business creation and sustainment strategy, the U.S. economy is unlikely to prosper as it did in the 20th Century.
To get a true picture of the 2016 state of the U.S. labor force, one must compare the Working Population (Employed) against the Non-Working Population (Unemployed and Not-in-Labor-Force) as shown. From 2000 through Q1 2016, the Working (Employed) population rose by 10% compared to the Non-Working Population rise of 39%. Jobenomics defines the Non-Working Population as Not-in-Labor Force (that rose by 37%) and Total Unemployed (that rose by 57% over the period, which preceded the major decline in unemployment since the end of the recession.
If these trends continue, Jobenomics predicts that the U.S. Not-in-Labor-Force will equal the Employed population by the mid-2020s, or sooner if the United States suffers a major financial crisis. From a Jobenomics perspective, small business expansion is the best antidote for mitigating any future financial crisis, as well as providing the biggest bang for the buck in strengthening the U.S. labor force, growing the economy and stemming the erosion of the middle-class.
 U.S. Bureau of Labor Statistics, Employment Situation Summary, http://www.bls.gov/news.release/empsit.nr0.htm
 Normally Seasonally Adjusted Numbers are reported to compensate for seasonal fluctuations.