Jobenomics

Goal: Creating 20 Million Jobs By 2020

Jobenomics - Goal: Creating 20 Million Jobs By 2020

Jobenomics Employment Report: April 2014

Jobenomics Employment Report: April 2014

www.Jobenomics.com

By: Chuck Vollmer

10 April 2014

Jobenomics tracks both unemployment (see: Jobenomics Employment Scoreboard: April 2014) and employment (this posting).   Download PDF versions: Jobenomics Employment Report - 1 April 2014 and Jobenomics Unemployment Report - 1 April 2014.

Executive Summary.   According to the April 2014 Bureau of Labor Statistics (BLS) Employment Situation Summary[1], unemployment rate was unchanged at 6.7% in March 2013, and total nonfarm payroll employment rose by 192,000, which is less than the 250,000 needed for a sustained economic recovery.


For six decades, the US produced tens of millions new jobs per decade.   Then the bottom fell out in the decade of the ‘00s with a loss of 1.2 million jobs.  It is critical that significant numbers of jobs are created this decade (’10s) for the US economy to recover.  20 million new jobs by year 2020 is a reasonable goal.  Not only has 20 million been historically achieved, but is the number needed to accommodate 16 million new labor force entrants per decade and to reduce 4 million unemployed in order to achieve the so-called “full employment” rate of 5%.  Based on this Jobenomics goal, the US should have produced 12.75 million jobs by 1 April 2014.  We have only produced 8.56 million—a 33% shortfall.

The US private sector created 9,194,000 jobs this decade, and the public sector lost 639,000 jobs.  Today, service-providing industries employ 70.4% of all Americans, the goods-producing industries employ 13.7% and government (federal, state and local) employs 15.8%.

83.5% of all new jobs this decade were produced by four service-providing industries: professional and business services; trade, transportation, utilities; education and health services; and leisure and hospitality.  As discussed herein, the much touted goods-producing manufacturing and construction industries are not likely to create a significant amount of jobs in the foreseeable future.

Small, emerging and self-employed business creation is essential for jobs creation and a healthy economic future.   Small business employs 77.4% of all Americans and has produced 71.4% of all new jobs this decade.  Unfortunately, the vast majority of government stimulus funds have been directed at financial institutions and large corporations with little for small business—the US economic engine.


US Employment.   Today, 137,928,000 Americans are employed in government and the private sector.  97,146,000 (70.4%) work in seven private sector service-providing industries.  The seven service industries are: Professional and Business services, Education and Health services, Financial Activities, Trade/Transport/Utilities, Leisure and Hospitality, Financial Activities, Information, and Other services.   18,941,000 (13.7%) are in private sector goods-producing industries that include Manufacturing, Construction and Mining/Logging that includes oil and gas extraction.  21,841,000 (15.8%) Americans work for government at the federal, state and local levels.  Since government employment is services-related, a total of 86.3% of all Americans work in service-related industries.

The 30-year trend in US employment has overwhelmingly been in the service-providing industries with a 30-year growth rate of 82%.  Government has also grown significantly at a rate of 36%.  However, as discussed in this posting, government employment has decreased in the last several years and is likely to continue to do so.  US goods-producing industries have declined 17% during the last thirty years.


While the US has enjoyed some employment growth since the beginning of this decade, America is only producing 67% (33% shortfall) as many jobs as needed.  The US produced only 8,555,000 jobs compared to the 12,750,000 jobs needed as measured against the traditional benchmark of 250,000 jobs per month (250,000 x 51 months = 12.75 million).   Of the three employment sectors reported by the Bureau of Labor Statistics, the private sector’s service-providing industries created 8,039,000 jobs, the private sector’s goods-producing industries created 1,155,000 jobs, and the government sector lost 639,000 jobs—with 67.3% (430,000) of all government jobs lost at the local level.


83.5% of all new jobs this decade were produced by four industries (Professional and Business Services, Trade/Transportation/Utilities, Education and Health Services, and Leisure and Hospitality) in the service-providing sector.  Manufacturing only contributed 7.2% to US employment growth.  Construction contributed 3.5%.  The non-internet information industries (such as publishing and news print) and government lost jobs this decade.

According to the most recent BLS Job Openings and Labor Survey[2], there were 4.0 million job openings. This survey includes estimates of the number and rate of job openings, hires, and separations for the nonfarm sector by industry and by geographic region.   As shown above, the four occupations that had the largest number of openings are: Professional & Business Services (831,000), Healthcare (610,000), Retail & Wholesale Trade (557,000), and Accommodation & Food Services (536,000).  The primary reason for the large number of job openings is due to the lack of job skills and the effects of computerization.  Regarding computerization, according to a recent Oxford University study[3], 47% of current US employment is potentially automatable within the next two decades.

Private sector businesses by company size.  The following charts examine private sector businesses by size.  As reported by the ADP National Employment Report (published monthly by the ADP Research Institute in close collaboration with Moody’s Analytics), data indicates that small business is the dominant economic force in terms of employment and job creation.


Today, small businesses (those companies with less than 500 employees as defined by the US Small Business Association) employ 77.4% of all private sector Americans with a total of 89.8 million employees—almost 5 times the amount of large corporations (1000+).  Very small businesses with less than 19 employees employ 65% more than all large corporations combined (30.3M versus 18.4M).


Since the beginning of this decade, small business produced 71.4% of all new American jobs.  This is an amazing statistic considering the adverse lending environment by financial institutions, mounting government regulation, and the pittance of federal government spending on small business creation.

Very small and startup businesses have traditionally been the primary source of employment for entry-level workers and the long-term unemployed.  Had the US government paid more attention to this category of employers during its generous handouts of $16.6 trillion (see: Stock Markets and The Fed posting) worth of federal government stimuli, bailouts and buyouts since the Great Recession, as many as five million more Americans would be employed today as estimated by Jobenomics.

According the US Small Business Association[4], startups, minus closures, create about 67% of American net new jobs.  Also according the SBA, about half of all new businesses survive five years or more, and about one-third of these start-ups survive 10 years or more.


It is a common misperception that small businesses, especially very small (1-19 employees), are the most fragile.  The chart (above) indicates that very small businesses have been the most resilient of the five business categories following the Great Recession of 2008.  This fact cannot be understated in an environment where small businesses have been starved for investment capital.


It is also a common misperception that small businesses are only involved service-providing industries whereas large major corporations dominate goods-producing industries.  The above chart indicates that small businesses play a major role in both goods-producing (manufacturing, construction, and mining) as well as the service-providing industries.

Thomson Reuters/PayNet Indices provide valuable insight into the health of small business.  The Thomson Reuters/PayNet Small Business Lending Index (SBLI)[5] measures the volume of new commercial loans and leases to small businesses.  To create the SBLI, PayNet tracks the new borrowing activity by millions of US businesses as reported by the largest lenders.  The Thomson Reuters/PayNet Small Business Delinquency Index (SBDI)[6] measures small business financial stress and provides early warning of future insolvency.  The most recent SBLI and SBDI are shown.


The SBLI (lending) indicates that new loan originations to small businesses have increased slowly since the end of the recession and may now be at the point of significant small business expansion, which is very good news for 2014.  The SBDI (delinquencies) shows that loan delinquencies (31 to 90 days past due) are at their lowest point since 2005.  This is very good news for future economic growth.  Small business creditworthiness is critical to business expansion and jobs creation.

Jobenomics asserts that the solution to growing America’s economy involves putting our small business economic engine into over-drive.  Energizing existing small businesses and creating new small and self-employed businesses could create millions of new jobs within a decade.  To prove the validity of this assertion, Jobenomics is working with a number of US cities to implement Jobenomics Community-Based Business Generators to create thousands of new-start businesses.  The objective of a Jobenomics Business Generator is to increase “birth rates” of start-up businesses, extend the “life span” of small businesses, and increase the number of employees per business, which has decreased by approximately 30% since the Great Recession.  Jobenomics is focused on four demographics with high growth potential:  Generation Y-, Women-, Minority-, and Veteran-Owned Businesses.

If Jobenomics can help create thousands of highly-scalable small businesses, America writ-large can facilitate creation of millions of small businesses that would transform our economy.  2014 could be a break-out year for small businesses that traditionally have been the primary source of employment for entry-level workers and the long-term unemployed.

Service-providing sector.  The US service-providing sector has grown 82% over the last three decades.


Since year 2010, the US service-providing sector averaged 82% growth with 7,388,000 new jobs created.  Today, the US service-providing sector employs a total of 97,146,000 people across the seven industries.


Employment statistics for industries in the service-providing sector are ranked by the number of new jobs created between 1 January 2010 and 1 April 2014 (51 months):

  • Professional and Business Services: 2,554,000 new jobs
  • Trade, Transportation, Utilities: 1,739,000 new jobs
  • Education and Health Services: 1,611,000 new jobs
  • Leisure and Hospitality: 1,574,000 new jobs
  • Other Services: 169,000 new jobs
  • Financial Activities:  167,000 new jobs
  • Information (non-internet, like publishing): -79,000 jobs lost

Of the seven service-providing industries, only the Information (non-internet companies like broadcasting and publishing, such as newspapers) industry lost jobs (-2.9%) during the post-Great Recession recovery period starting in January 2010.  The top three industries are Professional and Business Services (15.5%), Leisure and Hospitality (12.2%) and Education and Health Services (8.2%).

Goods-producing sector.  The US goods-producing sector includes Manufacturing, Construction and Mining/Logging industries and has declined 23% since its peak in March 2000.

US goods-producing sector has grown by 1,147,000 since its post-recession low in February 2010, but has a long way to go to reach peak employment.   Today, the goods-producing sector employs a total of 18,941,000 people across the three industries shown below.

Employment statistics for industries in this sector are ranked by the number of jobs created between 1 January 2010 and 1 April 2014 (51 months):

  • Manufacturing:  602,000 new jobs
  • Construction: 310,000 new jobs
  • Mining and Logging: 235,000 new jobs


The fastest growing industry in the goods-producing sector is Mining/Logging (35.4%), followed by Construction (5.5%) and Manufacturing (5.2%).  The explosive growth in the Mining/Logging industry is largely due to oil and natural gas extraction, and related exploration and support activities.

US Manufacturing Assessment.  While manufacturing has added 600 thousand new jobs since the beginning of this decade, it has a long way to go to achieve peak its peak level of 19.6 million in June 1979 after sustaining a consistent growth rate from its post-World War II low of 12.5 million in September 1945.   Since its peak in 1979, the US manufacturing industry has declined by 38%.


Today, US manufacturing employs 12,079,000.  While the addition of 602,000 new jobs from manufacturing’s all time low of 11.5 million in January 2010 is positive, the manufacturing sector is still in the doldrums.


Within the last 12 months, manufacturing has had 7 up-months and  5 down-months in terms of employment with a disappointing net increase of only 72,000 jobs in the last year.

Notwithstanding  the political rhetoric  about increasing US exports, re-shoring of US manufacturing jobs and increased US productivity, Jobenomics forecasts limited upside jobs potential in manufacturing due to excessive government regulation, improved automation, competitive foreign labor rates, and a lack of high-tech manufacturing skills in our civilian labor force (see Jobenomics’ Manufacturing Industry Forecast posting).  The advent of new technologies (like 3D printing of manufactured parts and advanced robotics) reduce the need for non-skilled labor as well as automating many higher level positions in marketing, accounting, machinists and administration.  As of the most recent BLS Job Openings and Labor Survey, US manufacturers have 237,000 open high-tech jobs that currently are unfilled out of a total of 4 million unfilled jobs.  Jobenomics is also concerned by the amount political and public  emphasis on the manufacturing growth as the primary engine for jobs creation.  While manufacturing is vitally important to our nation, political emphasis needs to be on the high growth industries in the service sector.  Manufacturing emphasis should be on protecting our gains and focusing on next-generation manufacturing technology, processes and recapitalization.

US Construction Industry Assessment.  Even though the construction industry is showing signs of growth, the construction sector continues to struggle after a rapid rise (69%) during the go-go years in the 1990s and the housing bubble in the early 2000s.


In the 2006-07 time period, peak construction employment was 7.73M.  Today, it is 5.96M, a loss of -23%.  The good news is that construction employment stopped its decline and has increased for its post-recession low of 5.44M in January 2011.

Residential construction employment was hardest hit segment with a 43% decrease from its pre-recession peak (3.45 million) to its post-recession low (1.98 M million).  Today, residential construction employment is still down from its peak by 35% with a total employment of 2.24 million.   Nonresidential construction fared slightly better with losses of  -24% from peak and -19% today with 2.82 million employed.  The heavy and civil engineering sector fared the best (largely due to federal stimulus programs) loosing -19% from peak and now down only -11% with a total of 904,000 employed.


Within the last 12 months, construction has had 10 up-months and 2 down-months in terms of employment with a net increase of 151,000 jobs in the last year.  As of the most recent BLS Job Openings and Labor Survey, US construction companies have 104,000 open jobs (mainly higher skilled jobs) that currently are unfilled out of a total of 4 million unfilled US jobs.  While these number are positive overall, the bulk of job hires occurred last year or early in 2013.  The construction industry had a downturn occurred during peak summer construction months.  In addition, increasing mortgage rates coupled with an eroding middle-class will hamper new home construction starts for the future.


Construction usually leads economic recoveries.  However, this recovery is different.  As shown above, according to US Census Bureau Data[7], new residential starts dropped from a peak 2.068 million in 2005 to a low 554,000 in 2009.  In 2014, new residential construction starts was 923,000, an increase of 40% from the 2009 low but still 55% below the 2005 high.

Jobenomics forecasts that the residential construction industry will not produce a significant number of jobs for the remainder of this decade due to foreclosures, underwater mortgages, unemployment as well as changing attitudes to the value of homeowners.  Due to the stagnant economy and government deficits, commercial and heavy construction is also unlikely to produce a significant number of new domestic jobs.  Jobenomics does see potential in major foreign construction projects, green construction and renovation of older homes, and reconstruction of disaster areas like the Northeast after Hurricane Sandy that is getting a $65 billion infusion of cash form the federal government.  However, these bright spots will not make up for stagnancy in US GDP and US employment.

US Mining/Logging Industry Assessment.  Mining (oil & gas extraction, coal and minerals) and logging goods-producing sector continues to be a bright area for employment growth.  From the beginning of this decade, mining increased employment by 235,000 jobs, with an impressive growth rate of 35.4%.  With proper private and public sector support, this industry has significant upside potential.

Mining exploration and support employment has more than doubled in the last decade and likely to double again with exploration for domestic energy sources.  Oil and gas extraction is also likely to double with new natural gas, oil shale, oil sands and offshore oil resources are exploited via new  technology, like horizontal drilling and hydraulic fracking.  Minerals mining employment has been stagnant over the decade, but this may change as commodity prices (gold, silver, copper) increase as well as worldwide demand for these commodities increase.  Coal mining and logging are not likely to increase anytime soon mainly due to environmental pressure and the emphasis on clean renewable technology.

The Government Employment Sector.  Total government sector employment currently is 21,841,000.  Since 1 January 2010, government has lost 641,000 jobs, a negative 2.9% growth rate.  Employment statistics in this sector is shown in the following chart.


The government sector continued to lose jobs with 67.3% of all job losses occurring with local government (mainly teachers, police and firefighters), 13.5% at the state level, and 19.2% in the federal government (not including military, which is also downsizing).  Jobenomics predicts that government job losses will continue to decline due the effects of sequestration as well as debt and deficit spending.  In addition, if the US economy suffers an economic disruption due to either domestic or foreign events, government spending will likely decrease further.

In conclusion, business and jobs creation is the number one issue facing US economic recovery.  While some would argue that debt/deficits or entitlement/welfare are the biggest issues, it takes businesses to create lasting jobs that generate tax revenue to run government as well as supporting the less fortunate.   The following two charts are about as simple as Jobenomics can make it.

US Labor Force Gains-LossesAccording to the April 2014 Bureau of Labor Statistics (BLS) Employment Situation Summary[8], unemployment rate was unchanged at 6.7% in March 2013, and total nonfarm payroll employment rose by 192,000, which is less than the 250,000 needed for a sustained economic recovery.  Also according to the BLS, people in the “not in the labor force” declined by 428,000 (good news) for a net gain of 620,000 as shown above.  Since year 2000, over 3 times as many people departed the US labor force than entered it, with 7,150,000 people entering as opposed to 22,739,000 who departed.  These numbers do not include the 20 million people that are unemployed.


Today, out of a total population of 318 million Americans, the US has 107 million taxpayers (34%) working in the private sector who support: 31 million government workers (including 10 million government contractors), 20 million unemployed or underemployed (BLS U6 rate) workers who are looking for work, 91 million able-bodied people (Not-in-Labor Force category) who can work but are not looking, and 69 million (mainly children, retired and disabled) who cannot work.   The US economy cannot be sustained by 34% supporting an overhead of 66% via a combination of welfare, entitlement, familial and charitable programs.

The solution to growing America’s economic base involves engaging our small business economic engine.  Even though severely constrained by limited financing and restrictive government policies, small businesses created 71% of all new jobs in the US since the end of Great Recession.  Jobenomics believes that new small, emerging and self-employed businesses could create 20 million new jobs within a decade, if properly incentivized and supported.  Consequently, Jobenomics is focused on four demographics with high growth potential that include Generation Y (via monetizing social networks), Women-Owned Businesses (via direct care business creation), Inner-Cities (via urban mining and related service businesses) and Veteran-Owned 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.


 

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

[2] BLS, Job Openings and Labor Survey (November 2013), http://www.bls.gov/news.release/jolts.htm

[3] Oxford University, The Future of Employment: How Susceptible Are Jobs To Computerisation?, Page 37,  17 September 2013, http://www.oxfordmartin.ox.ac.uk/downloads/academic/The_Future_of_Employment.pdf

[4] US Small Business Association, Office of Advocacy, Which businesses create more jobs—startups or existing businesses?,  http://www.sba.gov/sites/default/files/FAQ_Sept_2012.pdf

[5] Thomson Reuters/PayNet Small Business Lending Index, retrieved 23 Dec 2013, http://paynetonline.com/SmallBusinessInsights/ThomsonReutersPayNetSmallBusinessLendingInde.aspx

[6] Thomson Reuters/PayNet Small Business Delinquency Index, retrieved 23 Dec 2013, http://paynetonline.com/SmallBusinessInsights/ThomsonReutersPayNetSmallBusinessDelinquency.aspx

[7] US Census Bureau, Business and Industry, Time Series/Trend Charts, New Residential Construction, Annual Rate for Housing Units Started, http://www.census.gov/construction/nrc/historical_data/

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

Jobenomics Unemployment Report: April 2014

Jobenomics Unemployment Report: April 2014

www.Jobenomics.com

By: Chuck Vollmer

9 April 2014

Jobenomics tracks both employment (see: Jobenomics Employment Scoreboard: April 2014) and unemployment (this posting).   Download PDF versions: Jobenomics Unemployment Report - 1 April 2014 and Jobenomics Employment Report - 1 April 2014.

US Labor Force Gains-Losses

Executive Summary.  According to the April 2014 Bureau of Labor Statistics (BLS) Employment Situation Summary[1], unemployment rate was unchanged at 6.7% in March 2013, and total nonfarm payroll employment rose by 192,000, which is less than the 250,000 needed for a sustained economic recovery.  Also according to the BLS, people in the “not in the labor force” declined by 428,000 (good news) for a net gain of 620,000 as shown above.  Since year 2000, over 3 times as many people departed the US labor force than entered it, with 7,150,000 people entering as opposed to 22,739,000 who departed.

These numbers indicate that while improving slightly, the US economy is not sustainable due to massive exodus of people from the US labor force resulting in 30-year low labor participation rates and employment-to-population ratios.  As reported by Jobenomics for the last three years, the official unemployment rate is a misleading statistic.  It is theoretically possible for the US to have a zero rate of unemployment while simultaneously having zero people employed in the labor force.  To be counted in the “Officially Unemployed (U3)” category, people have to be looking for work.   When a person stops looking, the BLS moves them into the “Not-in-Labor-Force” category that is reserved for those who can work but are no longer looking.

Today, out of a total population of 318 million Americans, the US has 107 million taxpayers (34%) working in the private sector who support: 31 million government workers (including 10 million government contractors), 20 million unemployed and underemployed (BLS U6 rate) workers who are looking for work, 91 million able-bodied people (Not-in-Labor-Force category) who can work but are not looking, and 69 million (mainly children, retired and disabled) who cannot work.   The US economy cannot be sustained by 34% supporting an overhead of 66% via a combination of welfare, entitlement, familial and charitable programs.   The solution to growing the tax-base involves business creation.  Jobenomics advocates small, emerging and self-employed business growth.  Small businesses employ 77% of Americans and have created 71% of all new jobs this decade.   

Understanding Employment and Unemployment Statistics.   According to US Department of Labor, the basic concepts involved in identifying the employed and unemployed are quite simple:

  • People with jobs are Employed.
  • People who are jobless, looking for jobs, and available for work are Unemployed.  Those who are marginally employed, and looking for jobs, are deemed Underemployed.
  • People who are neither employed nor unemployed are not in the labor force.   Those who have no job and are not looking for a job are counted in the BLS’ Not-in-Labor-Force (NiLF) category. When a discouraged worker stops looking for work, that person is no longer considered unemployed by the BLS, they are moved into the NiLF category.

Therefore, as shown:

  • Working Population = Employed + Underemployed + Unemployed = 157.7 million.
  • Non-Working Population = Not-in-Labor-Force + All Others = 160.1 million.

The Working Population includes 137.9 million employed and 19.8 million people who have a marginal job, no job, or are looking for work (U6 category).  The BLS calls this group, the “Civilian Labor Force”, which is defined as citizens, who have jobs or are seeking a job, are at least 16 years old, are not serving in the military and are not institutionalized.

The Non-Working Population includes 91.0 million in the BLS’ Not-in-Labor-Force category who can work but are not looking.   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.  The remaining All Others category that include 69.1 million children, elderly, disabled, serving in the military, incarcerated, etc.

Unemployment Rate Categories.   Every month, the BLS publishes unemployment and employment statistics for economic, policy and public decision-making.  Unfortunately, few policy-makers, opinion-leaders, or American citizens truly understand these statistics.  More importantly, Americans tend to focus on only one statistic—the U3 rate or “official” unemployment rate—which is deleterious to good decision making.  The chart below highlights the U3 rate against a backdrop of other BLS unemployment (can work and are looking) and not-in-labor-force (can work but are not looking) categories.


The BLS calculates six unemployment categories (U1 through U6[2]) every month for those that can work and are looking for work.  The three most often reported categories are the so called Long-Term U1 Rate, the Official Unemployment U3 Rate, and the Total Unemployment U6 Rate.   These rates and numbers are calculated as a percentage of the US Civilian Labor Force, which is less than half of the total US population of 317.8 million[3].


As of 1 April 2014, the U1 category is currently 3.5% with 5.3 million unemployed longer than 15 weeks.  The U3 category is 6.7% with 10.5 million “officially” unemployed.  The U6 category is 12.7% with 19.8 million under-employed or unemployed citizens.


The official unemployment rate (U3 Rate) is a relatively poor indicator of the overall employment situation in the United States.   In comparison to those employed and those that can work but don’t (Not-in-Labor-Force), the official unemployment rate, called the U3 rate, is a relatively small number, undeserving of the amount of attention it receives.  As shown above, since the beginning of year 2000 to today, the U3 has increased by 4.8 million people compared to employment growth of 11.2 million and Not-in-Labor-Force growth of 22.4 million.

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 US to have a zero rate of unemployment while simultaneously having zero people employed in the labor force.  Stated another way, since Not-in-Labor-Force workers are not counted as unemployed, the official unemployment rate could theoretically be zero if all the current unemployed people simply quit looking for work and joined those in the Not-in-Labor-Force.

Jobenomics contends that Americans need to focus on increasing employment with emphasis on small businesses that currently employ 77% of the US work force, and reducing the vast exodus of people leaving our labor force—many to a netherworld of perpetual unemployment and welfare.  By shifting our focus to business creation, especially small businesses the mainstay of the US economy, the number of the unemployed would decrease correspondingly.


The chart above shows the recent US employment history[4].  US peak employment occurred in January 2008 with 138.1 million employed.  The post-Great Recession low occurred in February 2010 with 129.3 million employed.  Today, there are 137.9 million employed in government and the private sector.  Consequently, 8.7 million jobs were lost from peak to low.  From the low to present, 8.6 million jobs were created.  From the start of the Obama Administration, the US produced 0.9 million net new jobs.  From the start of this decade, the Jobenomics starting point, 8.6 million jobs were created—all in the private sector, whereas each level of government (federal, state and local) lost jobs.   The good news is that the USA has almost recovered all the jobs lost during the Great Recession.

Labor Force Participation.   Another way to look at our employment/economic situation is via the Labor Force Participation Rate[5].


The labor force participation rate is the percentage of working-age persons who are employed or unemployed but looking for a job.   Since year 2000, the US working population suffered a serious decline from a high of 67.3% to 63.2% today—a 6.1% decline from peak and rate that was last seen in July 1978.   Today’s labor force participation rate would be much lower if not for working women who did not participate in the US labor force in 1978 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.  Alarmingly, the BLS reports that 93% of the people in the Not-in-Labor-Force category currently do not want a job now.


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 US civilian labor force will increase 40% from 1990 to 2020 while the percentage of younger Americans, aged 16 to 24, will shrink by 25%.  BLS 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[6] 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.  Since 1 May 2000, 9.1% fewer Americans are engaged in the US work force.  Unless this trend is reversed, America will increasingly be a nation of haves and have-nots due to an eroding middle-class.

The “Not-in-Labor-Force” Category.  The downward trends in the US working population and the upward trend in the US non-working population pose serious challenges to America’s economy and way-of-life.  These trends are shown in the following charts.


From January 2000 until today, the Not-in-Labor-Force has grown 33% compared to 5% growth in the private sector work force.  At the current rate of Not-in-Labor-Force growth, those than can work but choose not to work will outnumber those working sometime in 2025.


According to BLS data[7], those in the Not-in-Labor-Force category (those that can work but don’t) has surged consistently since year 2000 by 22.7 million people.  Since 2009, the start of the Obama Administration, it grew by 10.9 million.  Since 2010, the beginning of the decade, it grew by 7.4 million people.  In the last 12 months, it grew by 1.1 million.   Last month, the trend reversed itself with 428 thousand less people voluntarily leaving the US work force.


In terms of demographics, the Not-in-Labor-Force includes 50 million people 55 years or older (55.0%), 24 million 25 to 54 year olds (25.6%), and 18 million 16 to 24 year olds (20.0%).  In terms of gender, NiLF includes 55 million women (59.8%) and 37 million men (40.2%).  Recent trends have been most unfavorable to those over 55 years old, who once out of work tend to stay permanently out of work.

The “Functionally Unemployed”.   Jobenomics defines “functionally unemployed” as the total number of people that have no job and are capable of working—110.9 million Americans.  From a Jobenomics perspective, Not-in-Labor-Force citizens should be classified as long-term unemployed.  If all underemployed, unemployed and Not-in-Labor-Force people were “functionally unemployed”, the unemployment rate would be an astounding 35%.


The Jobenomics “functionally unemployed rate” is 35% or 110.9 million people.   110.9 million is calculated by adding the BLS’ U6 number (19.8 million) and the BLS’ Not-in-Labor-Force number (91.0 million, the BLS’s seasonally adjusted number).   Dividing 110.9 million by the total US population of 317.8 million yields a functionally unemployed rate of 35%.  Understanding the functionally unemployed rate of 35% is a much better indicator of economic distress, than the much lower 6.7% “official” U3 unemployment rate that is most often watched and reported.

In conclusion, business and jobs creation is the number one issue facing US economic recovery.  While some would argue that debt/deficits or entitlement/welfare are the biggest issues, it takes businesses to create lasting jobs that generate tax revenue to run government as well as supporting the less fortunate.   The following chart is about as simple as Jobenomics can make it.


34% of all Americans are financially supporting the rest of the country.  107 million workers in the private sector are supporting 31M that work for government (including contractors), 91M that can work but choose not to work, 69M that cannot work (children, retired, disabled, etc.) and 20M that are looking for work (officially unemployed and unemployed).  For the American economy to prosper in the 21st Century, we must place more emphasis in growing the private sector labor force and reducing the overhead with emphasis on stemming the exodus of people looking for work to not looking for work.


The solution to growing America’s economic base involves engaging our small business economic engine, which is discussed in detail in the Jobenomics Employment Report: April 2014.  Even though severely constrained by limited financing and restrictive government policies, small businesses created 71.4% of all new jobs in the US since the end of Great Recession.  Jobenomics believes that new small, emerging and self-employed businesses could create 20 million new jobs within a decade, if properly incentivized and supported.



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

[2] BLS, Table A-15. Alternative measures of labor utilization, http://www.bls.gov/news.release/empsit.t15.htm

[3] US Census Bureau, US & World Population Clocks, , http://www.census.gov/main/www/popclock.html

[4] BLS, Table B-1, Total Nonfarm, Seasonally Adjusted,  http://data.bls.gov/timeseries/LNS12300000,

[5] BLS, Labor Force Participation Rate, http://data.bls.gov/timeseries/LNS11300000

[6] BLS, http://data.bls.gov/timeseries/LNS12300000

[7] BLS,  Table A-16, Persons not in the labor force and multiple jobholders by sex, not seasonally adjusted, http://www.bls.gov/webapps/legacy/cpsatab16.htm