Employment, What Employment?

Nonfarm Payroll Employment (NFP) rose by 120,000 in March, and the unemployment rate was little changed at 8.2 percent, the Bureau of Labor Statistics reported today.  What the BLS forgot to mention was that the unemployment rate of 8.2% was down from February's 8.3%.  Great news, isn't it?  I will respond to my rhetorical question, shortly.  First, the consensus was for NFP to print an increase of 205,000 jobs, which was a major miss!  However, the BLS numbers were even worst than reported because of the infamous "Birth/Death Ratio" added 90,000 statistical, non-real, jobs.  Therefore, the net job creation for March was not 120,000 but a lonely 30,000.  Second, how is it then that the unemployment rate went from 8.3% to 8.2%?  The answer is that the number of people not in the labor force is back to an "all-time high" of 87,879,000.  In other words, we have more people leaving, giving up looking for a job, than entering the labor force.  Therefore, the unemployment rate must go down!  Interesting, isn't it.  Another one of those statistical wonders.  For a longer-term perspective on the trend for "Not in Labor Force," see the following graph.

The "employment to population ratio" for March 2012 stood at 58.3%, which is up slightly from February's ratio of 58%.  Up slightly, but it is barely above its all-time low.  Why is this ratio is important?  Because it simply tells you the number of people employed in relation to the civilian population.  At 58.3%, it tells us that for every person in our civilian population, only .64 individuals have jobs and paying taxes. That will not sustain any effort at reducing our federal deficits.

The last graph illustrates the changes in employment for our current, so-called recovery and the previous ten postwar recessions.  To say the least, we are in really, big trouble!