Jobenomics

Goal: Creating 20 Million Jobs By 2020

Jobenomics - Goal: Creating 20 Million Jobs By 2020

Jobenomics U.S. Employment Analysis: Q1 2016

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Jobenomics U.S. Employment Analysis: Q1 2016

By: Chuck Vollmer

Contact information: cvollmer@jobenomics.com

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Jobenomics U.S. Employment Analysis – Q1 2016

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.

ToC Employment

 

Executive Summary

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.

Labor Force Gains-Losses

In April 2016, the U.S. Bureau of Labor Statistics (BLS) Employment Situation Summary[1] reported that 215,000 Americans entered the U.S. labor force on a seasonally adjusted basis.[2]    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.

Goal 20 Million Net New Jobs This Decade

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.

U.S

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.

U.S. Average of 1

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.

323 Million

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.

Percent of New US Jobs

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.

Working Versus Non-Working Populations

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.

[1] U.S. Bureau of Labor Statistics, Employment Situation Summary, http://www.bls.gov/news.release/empsit.nr0.htm

[2] Normally Seasonally Adjusted Numbers are reported to compensate for seasonal fluctuations.

2016 State of the U.S. Labor Force

2016 State of the U.S. Labor Force

By: Chuck Vollmer

11 January 2016

Download a copy of this report at:

 2016 U.S. Labor Force State-of-the-Union 11 Jan 2015

Executive Summary.  To get a true picture of the 2016 state of the U.S. labor force, one must examine all three labor force categories reported by the U.S. Bureau of Labor Statistics (Employed, Unemployed and Not-in-Labor-Force) as opposed to focusing on the “official” Unemployed rate known as the U3 rate, which represents only 2% of the U.S. population or 5% of the U.S. civilian labor force.  While Americans should be pleased that the U3 rate has dropped from its post Great Recession 10% peak to 5% today, America should concentrate on the combined non-working Not-in-Labor-Force and total unemployed (U6) population that encompasses 34% of the U.S. population.

US Labor Force Trends 2000 to 2016

 

From January 2000 to January 2016, the number of citizens Employed rose by 11%, Not-in-Labor Force by 37% and U6 Unemployed by 57%.  Since the end of the Great Recession in 2010 through 2015, Unemployment dropped by 40% but voluntary workforce departures continued a steady exodus reaching a high watermark of 94 million able-bodied adults who choose not to work.  If this trend remains unabated, Jobenomics forecasts that America’s able-bodied, not-working population could equal its working population by the mid-2020s, or sooner if the United States slips into recession.

By not including the able-bodied, not-working population in State of the Union deliberations, policy-makers play a statistical shell game with American citizens who cannot be expected to comprehend the intricacies of labor force statistics.   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 involves how government measures unemployment.  To be classified as unemployed, one must be looking for work.  Able-bodied Americans who quit looking and voluntarily depart the workforce are accounted in the Not-in-Labor-Force category—a category that is generally never mentioned in politics or the media.

While Americans should be pleased that employment is gradually increasing and the unemployment rolls are dropped significantly from Great Recession highs, they should be alarmed by exodus of tens of millions of able-bodied American adults to the netherworld of public/familial dependency and alternative lifestyles that harm economic growth and place greater burden on working and taxpaying Americans.

Jobenomics 2016 State of the Union’s Labor Force Assessment.[1]  As of 1 January 2016, out of a total U.S. population of 322,810,000[2], there are 70,874,000 citizens that cannot work (22% of the population consisting mainly of children, caretakers, retired, disabled, institutionalized and active duty members of the armed forces) and 251,936,000 citizens in the Civilian Noninstitutional Population (78% of the population consisting of all persons in the Civilian Labor Force and Not-in-Labor-Force categories that are 16 years of age and older and not inmates of mental or penal institutions or military active duty).

The Bureau of Labor Statistics (BLS) calculates the number of citizens in the Civilian Labor Force (persons classified as Employed or Unemployed) at 157,833,000 (49% of the U.S. population) and in the Not-in-Labor-Force citizens at 94,610,000 (29% of the population).

Within the Civilian Labor Force, the BLS reports on the total number Employed—currently 149,929,000 or 46% of the population—and six unemployment categories as shown below.  The most highly reported unemployment category is the U3 “Official” Unemployment category of 7,891,000 unemployed Americans (5.0% of the Civilian Labor Force or 2% of the overall population).  For this report, Jobenomics typically uses, for reasons explained herein, the U6 Unemployment category that consists of 15,625 000 citizens (9.9% of the Civilian Labor Force or 5% of the overall U.S. population).

URates

 

According to BLS, the basic concepts involving the U.S. labor force are relatively straightforward:

  • 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, 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 accounted in the Not-in-Labor-Force category that includes people (over 16 years and older), or so-called “discouraged” workers, who choose not to work.

From a Jobenomics perspective, Not-in-Labor-Force personnel should be classified as unemployed in the same manner that marginalized and underemployed citizens are included in the U6 Unemployment category.  Determination whether a person is counted as unemployed should not depend on subjective, and often whimsical, survey questions 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): [3]

  • 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.

Jobenomics’ 2016 State of the Union’s Labor Force Assessment.   To get accurate numbers in today’s labor force, Jobenomics uses a combination of Total Employed, U6 Unemployed and Not-in-Labor-Force obtained from the BLS Employment Situation Summary Report, Tables A-1 and B-1.

Jobenomics contends that able-bodied Americans who can work but don’t work, regardless if they are looking or not, should be considered unemployed for the same reason that “discouraged”, “marginally attached” and “part-time workers for economic reasons” are included in the U6 unemployment category.  The reason why the Not-in-Labor-Force and U6 categories should be examined collectively is for governmental transparency and accountability.  Sooner or later, the American public 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 involves how government measures unemployment.  To be classified as unemployed, one must be actively looking for work.  Able-bodied Americans who are no longer looking are accounted in the obscure, under-reported and arbitrary Not-in-Labor-Force category.  A combination of the two categories gives policy-makers and the public a truer picture of the “functionally” unemployed.

In terms of the President’s State of the Union Address on 12 January 2016 and the Republican response, it will be interesting to hear if the dialogue revolves around the U3 “official” unemployment rate and the rate of employment expansion during the post-recession recovery period.  From a Jobenomics perspective, resolving the Not-in-Labor-Force challenge is a much more important issue regarding the state of our union, the health of our economy and vitality of our labor force.

Year 2000 Through 2015 U.S. Labor Force Gains/Losses.  From the beginning of year 2000 through 2015, the net loss to the U.S. labor force totaled 18.7 million people.

Year 2000-2015 US Labor Force Gains Losses

Employment grew from 130.8 million to 143.2 million for a gain of 12.5 million workers.

During the same period, the combined cadre of unemployed and voluntary departures increased from 78.6 million to 109.7 million for a loss of 31.1 million potentially productive workers.

It is also important to note that the U.S. population grew by 40 million people since year 2000—a 15% increase from 2000 through 2015.  To understand the effect of population growth, one must look at the BLS’ Employment-to-Population Ratio that is at its lowest level in 30 years.  The Employment-to-Population Ratio would be much lower if not for working women who were not engaged in the U.S. labor force in the 1970s as they are today.  For more information on this, go to http://Jobenomics.com.

The principle source of employment growth since the beginning of this century has been in the private sector that created 11.0 million new jobs (88% growth or 5.5% growth rate per year)  followed by government that created 1.5 million new jobs (12% growth or 0.75% growth rate per year).

Within the private sector, the seven service-providing industries (professional and business services; education and health services; trade, transportation and utilities; financial activities; leisure and hospitality; information; and other services) produced 100% of the jobs growth during the period with 15.9 million new jobs, or growth rate of 1 million new jobs per year.  The three goods-producing industries (manufacturing, construction and mining/logging) lost 4.9 million jobs during the period.  Jobenomics forecasts that the goods-producing industries will not produce a significant amount of net new jobs in the foreseeable future regardless of amount attention it receives and political rhetoric.  For more information why, see http://Jobenomics.com.

Year 2010 Through 2015 U.S. Labor Force Gains/Losses.  From the beginning of year 2010 through 2015, the post Great Recession recovery period managed by the Obama Administration, generated a net gain of 13.8 million people in the U.S. labor force.

Year 2010-2015 US Labor Force Gains Losses

Employment grew from 129.7 million to 143.2 million for a gain of 13.6 million workers.  During the same period, the combined cadre of unemployed and voluntary departures remained virtually the same (110.0 million in year 2010 versus 109.7 million as of December 2015) with reductions of the number of unemployed being replaced by voluntary departures.

The principle source of employment growth year 2010 through 2015 has been in the private sector that created 14.0 million new jobs (13% growth or 2.2% growth rate per year)  followed by government that lost 0.5 million new jobs (a negative 2% growth or 0.37% growth rate per year).

Within the private sector, the seven service-providing industries produced 87% of the jobs growth during the period with 12.2 million new jobs, or growth rate of 2 million new jobs per year.  The three goods-producing industries also generated 1.9 million new jobs during the period, or 13% of the new jobs generated during the period.

Private sector service-providing industries and small businesses have been work horses of the economic recovery and principle sources of new jobs.  Today, private sector businesses employ 85% of the U.S. labor force, of which 100,590,000 Americans (70.9%) have service-providing jobs and 19,651,000 (13.7%) have goods-producing jobs.  As reported by the ADP National Employment Report[4], which surveys 400,000 U.S. businesses each month, small businesses created over 3.5 times as many jobs as big businesses in the last six years, 10.5 million versus 3.0 million respectively.

Over the last six years, the highly publicized “official” U3 unemployment rate was cut in half, from 10% to 5%, with a lot of fanfare.  Similarly, the “total” U6 unemployment rate fell by 43%, from 17.3% to 9.9%, with a reduction of 10.6 million people in the U6 category.   However, many of these formerly unemployed simply quit looking for work and were recounted in the BLS Not-in-Labor-Force category that grew by 10.3 million people, essentially wiping out the positive U6 gains.

From a policy-making perspective, the 94.1 million Americas who are no longer looking for work needs significantly more attention than the 15.6 million Americans who are still looking or are underemployed.   The current BLS Employment Situation Summary Report states that 95% of the Americans in today’s Not-in-Labor-Force “do not want a job now”.[5]   Why should they?  America provides generous welfare and means-adjusted programs that are not tied to workfare like the most generous European nations require.  Rather than hiring, U.S. corporations are preoccupied using profits on mergers and acquisition, expanding overseas and relocating corporate headquarters in foreign countries as a tax-saving measure.  Learning new skills to compete for 5.1 million open America jobs[6] takes lots of effort, making it much easier to drop out of the labor force, go on the dole and pursue alternative ways of living.

Year 2015 U.S. Labor Force Gains/Losses.  In 2015, the U.S. labor force suffered a net gain of 3.3 million.

Year 2015 US Labor Force Gains Losses

Employment grew from 140.6 million to 143.2 million workers for a gain of 2.7 million jobs, which was supplemented by a gain of 0.6 million in the combined U6/Not-in-Labor-Force cadre, which remained at relative the same level from the beginning of the year, 110.0 million to 109.7 million respectively.  While the U6 unemployment rolls decreased by 1.9 million people, 1.2 million people quit looking for work and voluntarily departed the U.S. labor force.  Private sector service-providing industries and small businesses continued to the dominant forces in labor force expansion producing 2.4 million (90%) and 1.9 million (70%) of the 2.7 new jobs created during the year.

From policy and economic growth perspectives, 2016 State of the Union deliberations should contain an order of magnitude more labor force programs oriented to service industry vitality, small business hiring incentives and small business creation than programs for big businesses and government jobs that are unlikely to create a meaningful number of new jobs.  In fact, big business is likely to downsize even further in 2016 consider the historically high number and value of corporate mergers and acquisitions, international pursuits and corporate inversions—all of which have negative consequences for U.S. labor force expansion and prosperity.  Small business expansion provides the most bang for the buck for strengthening the U.S. labor force and stemming the erosion of the American middle class.

[1] Labor force data in this document is taken from the latest U.S. Bureau of Labor Statistics (BLS) Employment Situation Summary Report unless otherwise footnoted.  The majority of BLS data used is from Table A-1, Household Data, http://www.bls.gov/news.release/empsit.t01.htm, and Table B-1, Establishment Data, http://www.bls.gov/webapps/legacy/cesbtab1.htm.

[2] U.S. Census Bureau, U.S. and World Population Clock, http://www.census.gov/popclock/

[3] BLS, Who is not in the labor force?, http://www.bls.gov/cps/cps_htgm.htm#nilf

[4] ADP Research Institute, National Employment Report, December 2015,  http://www.adpemploymentreport.com/

[5] BLS, Table A-38, Persons not in the labor force by desire and availability for work, age and sex,  retrieved 10 January 2016, http://www.bls.gov/web/empsit/cpseea38.htm

[6] BLS, Job Openings and Labor Turnover Report, Table 7, Job openings levels and rates by industry and region, retrieved 10 January 2016, http://www.bls.gov/news.release/jolts.t07.htm

Fastest Growing Occupations

Download PDF Version: Fastest Growing Occupations – 22 Oct 2013

22 October 2013

As discussed in the latest monthly Jobenomics Employment Report, 84.3% of all new jobs this decade have been created in four of the thirteen US industry groups.  The fastest growing industry is Professional and Business Services with 2.131 million new jobs followed by Trade, Transportation and Utilities with 1.498 million; Education and Health Services with 1.385 million; and Leisure and Hospitality with 1.278 million for a grand total of 6.292 million new jobs.  This report examines these four industry groups for the fastest growing occupations in terms of jobs added and growth rate this decade.  This data is offered as a guide for those entering the labor force or planning a career.

Industry Employment Growth This Decade (10s)

Professional and Business Services.  According to the BLS, Professional and Business Services supersector is part of the service-providing industries group and consists of these sectors: Professional, Scientific, and Technical Services (NAICS 54), Management of Companies and Enterprises (NAICS 55), and Administrative and Support and Waste Management and Remediation Services (NAICS 56).  NAICS (pronounced “nakes”) is the North American Industry Classification System that is used by business and government to classify business establishments according to type of economic activity in the United States, Canada and Mexico.  The following two charts show the number of jobs added and growth rate this decade for major occupations within the Professional and Business Services.

Professional and Business Services Jobs

Professional and Business Services Growth

 

Trade, Transportation, and Utilities.  According to the BLS, the Trade, Transportation, and Utilities  supersector is part of the service-providing industries group and consists of these sectors: Wholesale Trade (NAICS 42), Retail Trade (NAICS 44-45), Transportation and Warehousing (NAICS 48-49), and Utilities (NAICS 22).  The following four charts show the number of jobs added and growth rate this decade for major occupations within Trade, Transportation, and Utilities.

Wholesale and Retail Trade Jobs

Wholesale and Retail Trade Growth

Transportation and Utilities Jobs

Transportation and Utilities Growth

Leisure and Hospitality.  According to the BLS, the Leisure and Hospitality supersector is part of the service-providing industries group and consists of these sectors: Arts, Entertainment, and Recreation (NAICS 71) and Accommodation and Food Services (NAICS 72).  The following two charts show the number of jobs added and growth rate this decade for major occupations within Leisure and Hospitality.

Leisure and Hospitality Jobs

 Leisure and Hospitality Growth

Education and Health Services.  According to the BLS, the Education and Health Services supersector is part of the service-providing industries group and consists of these sectors: Educational Services (NAICS 61) and Health Care and Social Assistance (NAICS 62).  The following two charts show the number of jobs added and growth rate this decade for major occupations within the Education and Health Services.

Education and Health Services Jobs

Education and Health Services Growth