The economy has lost about 3 million jobs in the past 5 months and seems poised to lose another 2-3 million in the next 5 months. Worse yet, government is the last place one would want to see job creation yet government remains the most likely source of hiring.

Please consider Obama Stimulus May Get a Timely Boost From U.S. Census Hiring.

The 2010 U.S. census may provide an extra kick to the U.S. economy, just as the effects of President Barack Obama’s $787 billion stimulus plan start to take hold.

The census will put more than 1.4 million people on the federal payroll over the next year, making it the largest peacetime government jobs program ever, according to the Census Bureau. The first 140,000 will start work in April. Most of the rest will be hired early in 2010.

The jobs, though temporary, may ease some of the pain in a labor market where almost 3 million have been put out of work in the last five months. The Census Bureau will spend about half its $14 billion budget for the 2010 headcount on personnel, including jobs that pay $10 to $25 an hour and last several weeks to several months.

The search for census takers before the last headcount, in 2000, strained a tight job market. That’s hardly a problem this time around, with unemployment at a 25-year high of 8.1 percent and economists forecasting the rate will average 9 percent next year. Already the Census Bureau has more than 900,000 applicants for the jobs to be filled in April, or more than six applications for every opening.

The widespread job losses of the past year mean applicants are more highly qualified than ever, said James Christy, the Census Bureau’s Los Angeles regional director. From college students to bankers, lawyers and former corporate executives, “we’re just seeing a much more capable group,” he said. “This is my third census, and so far it’s been the best crop of people we’ve ever put in the field.”

The workers being hired now will be sent out beginning April 6 to double-check addresses around the country. Because the work is erratic and part-time, and not always much fun, turnover is high even when jobs are scarce. Workers have to go door-to-door, sometimes in dodgy neighborhoods, asking questions some people don’t want to answer.

“Most people think they can do it but it’s not that easy,” Matos said. In 1990, when unemployment averaged 5.6 percent, turnover among headcounters during the year was 100 percent.

This year the Census Bureau is planning for a 30 percent turnover. To ensure it has a large enough pool to draw on, the bureau will interview more than 3 million people.

Bear in mind that government cannot really “create” any jobs per se. It can raise taxes and shift private sector jobs creation to government jobs creation (typically a malinvestment), and it can bring production and consumption forward for those jobs that are genuinely needed (filling potholes), but once the potholes are filled, and the census is taken one has to ask the question, “What will we do for an encore?”

Note that the vast majority of those census jobs will be part-time and most of them will not start until 2010. By then the unemployment rate is likely to be well north of 9%.

Depression Statistics

Inquiring minds are looking at the Labor Force Components 1900-1947 for clues as to what happened during the Great Depression as compared to now. “Fedwatcher” who sent me that link writes:

Prior to 1947, a 14-year old willing to work was counted in the employment stats, after 1947 it was a 16-year old willing to work. Also, during the Great Depression, many more single women were willing to work to contribute to family income and there were fewer married women with children who could work while in other extended families they were available to work.

Moreover, the structure of society was different and to compare to today, we should look at % of Nonfarm employees unemployed. From D 1-10 on page six We see that unemployment of nonfarm employees was 5.3% in 1929 but 14.2% in 1930 and rose to 37.6% in 1933.

However the wider classification of “Civilian labor force” was 3.2% in 1929 but 8.9% in 1930 and rose to 25.2% in 1933. I believe these numbers were adjusted to eliminate the 14-year old and 15-year old workers. The numbers again I believe are closer to our current U6 rather than U3.

If we take 16% as a real U6 number and compare it to the nonfarm number, we are worse off than 1930 and if you take the wider classification, we are even worse off.

It is not entirely clear as to what adjustments were done to the numbers in the table above. However, the large gap in unemployment from the total civilian labor force and the nonfarm portion is telling as we were still largely agrarian. Today we are not.

During the depression they tried to get more sophisticated it their numbers. In the early years, they asked the question “are you willing and able to work” if you said yes and were not employed, you were unemployed.

People entered the labor force at younger ages then and even a G.E.D. was not necessary for a good job. A part time job was most likely counted the same as a full time job, hence the extremely low number for 1929. In the report, there was an attempt to normalize the numbers to make them more comparable to today. However, that is not possible as their survey methods were constantly changing and with the New Deal (1933 and beyond) they were trying to do a better job.

Furthermore, “unemployment” insurance did not exist so they had to rely on surveys, as there were no hard numbers. Today with “Withholding” and various taxes, we should be able to do a better job, but “politics” has made that not so. The birth death model for example is unnecessary as every quarter hard numbers are available to states collecting payroll taxes and the IRS collecting withholding. They give us “engineered” numbers because they want to, while real hard numbers are available.



Thanks Fedwatcher.

For a look at the current U3 and U6 numbers (U3 is the “official” unemployment rate), please see Jobs Contract 14th Straight Month; Unemployment Rate Soars to 8.1%.

Table A-12

Table A-12 is where one can find a better approximation of what the unemployment rate really is. Let’s take a look

click on chart for sharper image

Grim Statistics

The official unemployment rate is 8.1%. However, if you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

It reflects how unemployment feels to the average Joe on the street. U-6 is 14.8%. Both U-6 and U-3 (the so-called “official” unemployment number) are poised to rise further.

Looking Ahead

Using U6 as our guide, the jobs numbers are very grim. In fact, they are worse at this point than during than during the Great Depression. How deep the losses get depend on how long the recession lasts. Bernanke thinks this recession will be over in the second half of the year. Roubini thinks the Recession lasts through 2010 no matter how hard the Obama administration tries to stop it. For more details, please see Roubini: How Long Will the Recession Last?

For now, the market is in rally mode.

Stocks were up for a third straight day, the biggest 3-day rally since November. This has many asking the question “Is this a relief rally or something bigger?” From an investment standpoint the question is moot. Regardless of what’s happening or why, the name of the game is to make sure you do not get run over by it.

Mike “Mish” Shedlock
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