Friday, January 4, 2013

Wrapping up: 2012 chart of the year

The latest numbers are in on jobs from the BLS. November's unemployment rate was revised upward to 7.8% (from 7.7%) and the December number held steady at that level. The labor force participation rate also remained unchanged--at 63.6%--for December, as did a host of other metrics, like the number of long-term unemployed, the number of marginally attached workers, and the number of people employed part-time for economic reasons.

In fact, the report from the BLS reads like one long "ditto" to the previous report. But buried in the mass of data is the evidence for a trend that no one in the mainstream media or in the Administration (or really, in all of D.C.) wants to talk about: the number of jobs added or lost as a function of age. Oh sure, the fact that the BLS reports an additional 155,000 jobs is instantly jumped on (despite the fact that the number barely keeps pace with inflation), but the analysis ends there.

Look at the first line in the above table, "Total, 16 years and over" (the number of employed persons, in thousands). And look at the corresponding unemployment rates for the three months--December 2011, November 2012, and December 2012--being considered. The totals for both months in this year are lower than for December 2011, yet the unemployment rate was at 8.5% a year ago! How is this possible? Well, it's because of a decreasing labor force participation rate, plain and simple.

But there's more. That same table breaks down employment as a function of age. And if we go back and look at this data for each month across the last four years, we could construct a very nice chart. Fortunately, Tyler Durden over at Zerohedge has already done the work. Ready? Here it is:

Drink it in. What that chart shows is that since 2009, the number of workers have increased in only two age groups: 55-69 year olds and 20-24 year olds. But the latter has really seen only minimal growth. Most of the job growth has has occurred among older workers. Durden sums it up:

In December the American jobs gerontocracy continued its relentless course, and as the two charts below summarize since Obama's first term, some 2.7 million jobs in the 16-55 year old category have been lost. The "offset": 4 million jobs for Americans between 55 and 69.
In a strong economy, the 20-24 year olds group should be adding jobs hand over fist, as they represent the newest additions to the adult wokforce and include people coming out of college. Instead, growth there has been meager and much of it is part-time or very low wage work, as recent grads find them\selves forced to take whatever job is available. But this is no less true for the oldest group, many of whom have been forced out of retirement--or semi-retirement--and into the job market because their savings took too much of a hit during the financial crisis.

The middle workers, the ones with children to support and mortgages to pay, are getting squeezed out because--and this is important--there is a floor to how low most are willing to go, when it comes to wages. Again, they have bills to pay that just can't be made to go away. And of course, the extension of unemployment benefits only drives this point home (and helps to slow job growth, as well).

Look at the above chart and compare it to the unemployment rate for the same period (2009-present):

The unemployment rate started trending down at the end of 2009, but the age group that includes the bulk of American workers--25 to 54 year olds--has yet to recover. At all.

Is this what a recovery looks like?

Cheers, all.

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