Jobenomics U.S. Unemployment Analysis: Q3 2015
By: Chuck Vollmer
10 November 2015
Jobenomics tracks both unemployment (Jobenomics U.S. Unemployment Analysis: Q3 2015) and employment (Jobenomics U.S. Employment Analysis: Q3 2015). Download Complete Reports: Jobenomics U.S. Unemployment Analysis-Q3 2015, 10 Nov 2015 (23 pages) & Jobenomics U.S. Employment Analysis-Q3 2015, 23 Oct 2015 (30 pages)
Executive Summary Only
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 the dynamics between these categories is required to understand American unemployment and employment statistics.
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 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 a separate category called Not-in-Labor-Force.
The latest BLS unemployment report states that last month 142,000 Americans entered and 579,000 able-bodied Americans voluntarily departed the labor force, for a net workforce loss of 437,000. The official number of unemployed (i.e., those who continued to look for work) dropped by 114,000, while positive, this drop did not compensate for the 437,000 people who quit looking for work and joined the Not-in-Labor-Force. Consequently, last month the U.S. labor force decreased (loss) by a net 323,000 workers (142,000 gains + 114,000 less unemployed - 579,000 voluntary departures = 323,000 less workers).
Labor force statistics are also presented for the last quarter (Q3: July, August, September 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 14,362,000 workers with 2,262,000 more Americans unemployed today than 15 years earlier. While recent BLS employment and unemployment reports have shown some positive trends, these trends are more than offset by the number of voluntary workforce departure—many of whom become dependent on welfare and familial assistance, or pursue a livelihood in the underground economy or some other antisocial activity.
From a Jobenomics perspective, the true unemployment rate is dramatically higher than advertised if the Not-in-Labor-Force group is included. The ability to work should be the determining factor for unemployment as opposed to whether or not a person is looking for work. As of 1 October 2015, the combined number of U.S. unemployed (U6) and Not-in-Labor-Force personnel totals 110.3 million Americans, or 34% of the U.S. population (321.9 million), or 70% of the U.S. civilian labor force (156.7 million) as reported by the BLS.
Another alarming trend involves the dramatic rise in the contingent workforce. The BLS defines the contingent workforce as the portion of the labor force that has “nonstandard work arrangements” or those without “permanent jobs with a traditional employer-employee relationship”. The contingent workforce is comprised of two general categories: core and non-core. Core contingency workers include agency temps, direct-hire temps, on-call laborers and contract workers. Core contingency workers generally represent low wage earners that have nonstandard work arrangements out of necessity. These workers are often subjected to exploitation and are usually not entitled to traditional employer-provided retirement and health benefits. The non-core category includes independent contractors, self-employed workers and standard part-time workers who work fewer than 35 hours per week. Non-core workers generally seek nonstandard work agreements as a matter of choice. Jobenomics views the non-core workforce as a positive economic force that will grow significantly via the emerging digital economy. On the other hand, Jobenomics views the core contingency as a major challenge as more and more citizens work for substandard wages, become frustrated, and seek alternative ways of income.
As reported by the BLS, contingency workers represent 29% of the U.S. workforce. The GAO estimates the contingent workforce was as high as 40.4% after the Great Recession.  According a Bloomberg Businessweek, contingency workers could represent 40% of the U.S. labor force in 2020. Jobenomics forecasts that contingent work could become the dominant (over 50%) form of labor in the United States in the next ten to fifteen years as businesses transition from dependence on full-time to contingent workers. The Jobenomics projection of 50%, or more, is a reasonable estimate given current trends in: (1) labor force gains and losses, (2) ongoing technology revolutions, (3) the emerging digital economy, (4) cultural differences of new labor force entrants and (5) growing part-time labor force. The first four trends are discussed in detail in the Jobenomics Employment Analysis: Q3 2015. The growing part-time labor force (5) is discussed in detail in this analysis since these workers are the largest component of low wage earners in the contingent labor force.
If low wages incentivize workers to depart the labor force in favor of lucrative and unencumbered government benefits, then the United States has a serious problem for two reasons. The first reason is an established culture of voluntary workforce departures. The second reason is that about three out of every four American workers earn less than U.S. mean income. These two reasons are the two greatest contributors to the erosion of the American middle-class. If American policy-makers and decision-leaders are serious about revitalizing the eroding middle-class, they must address the growing voluntary workforce departures, contingent workforce and below mean income issues.
Out of a total of a total of 160.1 million full-time and part-time American workers with earnings, 115.2 million workers (72%) make less than the U.S. mean (average) income of $54,964. There are an additional 95 million able-bodied workers who choose not to work that are not included in these figures. As addressed in detail in this analysis, wage earners who work for below average income need more attention from policy-makers and decision-leaders to motivate them to improve their labor force skills and mitigate the reasons to voluntarily drop out and join the 95 million that can work but don’t. As shown above, the demographics with the greatest need and potential are women, minorities, new workforce entrants and the growing cadre of poor white males. 96% of new workforce entrants aged 15 to 24, 85% of Hispanics, 82% of Blacks, 80% of Females, 68% White Non-Hispanics, 65% of Males and 60% of Asians earn below average wage.
Jobenomics asserts that the number one U.S. labor force challenge involves business and job creation. The place to start is with the demographics with the greatest need and potential. Both women-owned and minority-owned firms have been growing at rates far greater than the national average. For example, during the Great Recession of 2007 to 2009 and the post-recession period of slow U.S. economic growth, minority-owned firms grew by 39% compared to the national average of 2%.
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 20 million of new jobs within a decade. To prove the validity of this assertion, Jobenomics is working with a number of cities to implement community-based business generators to mass produce startup 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.
American focus should also be on the industries producing highest employment growth (professional and business services; trade, transportation, utilities; education and health services; and leisure and hospitality, which collectively produced 81.2% of all new jobs this decade), filling the 5.4 million unfilled U.S. jobs, and exploiting new employment opportunities generated by the Energy Technology Revolution and Network Technology Revolution, which can create tens of millions of new jobs each. For more information on these focus areas see Jobenomics Employment Analysis: Q3 2015.
Out of a population of 322 million citizens, only 34% of all Americans are financially supporting the rest of the country. The U.S. currently has 110 million private sector workers that support 32 million government workers and contractors, 16 million total unemployed (U6 rate), 95 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 69 million people work full-time, 26 million people work part-time and 15 million are self-employed. 110 million strong private sector labor force is the sector of the U.S. economy that provides the majority of American jobs, goods and services, tax revenue and social assistance. The U.S. economy cannot be sustained by 34% supporting an overhead of 66%. More people must be productively engaged in the labor force for the U.S. economy to flourish. A vibrant labor force depends on a well-trained, disciplined, and engaged labor force. The antidote to unemployment and voluntary workforce departures is employment and meaningful career opportunities.
 U.S. Bureau of Labor Statistics, Employment Situation Summary, http://www.bls.gov/news.release/empsit.nr0.htm
 U.S. Government Accountability Office, Contingent Workforce: Size, Characteristics, Earnings, and Benefits, 20 April 2015, http://www.gao.gov/products/GAO-15-168R
 Bloomberg Businessweek, 20-25 October 2014 Edition, Companies/Industries, Page 20