Weekend Economists Salute Ruin July 3-5, 2015

[Demeter]

23. June’s unemployment dip means more Americans leaving the workforce

http://www.pbs.org/newshour/making-sense/junes-job-report/

the “establishment survey” sent out to businesses asking how many jobs they created last month, and the “household survey” that asks people about their employment status—are at odds with each other. How so?

While businesses reported creating 223,000 jobs in June, we saw a decrease of 56,000 in those considered officially employed. Why, you may wonder, aren’t we seeing more people “employed”?
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One hypothesis is that businesses created mostly part-time jobs, and/or that those who had already had part-time jobs took another. To be considered a full-time worker, one must work at least 35 hours a week. But the Bureau of Labor Statistics also counts part-time workers that have multiple jobs adding up to 35 hours as full-time employees.

This could also explain why the number of people working part time for economic reasons fell by almost 150,000.

Also of note, while the number of employed dropped by 56,000, the number of people that were classified as unemployed also decreased—by 375,000. OK, so how does that happen? You would assume that if the number of employed people grows, the number of unemployed would shrink.

Discouraged workers, people that are considered not in the labor force, but who would like a job, increased by some 20,000. (Remember, the Bureau of Labor Statistics only counts those people who have looked for a job in the past four weeks as unemployed.)

So let’s say of that 375,000, 56,000 became employed. Some 20,000 were then classified as discouraged workers, having not looked for a job in a month, but still very much wanting a job. How can we account for the remaining 300,000?

It’s possible that many simply left the workforce. Now this could mean that more and more baby boomers are retiring, but it could also mean that previously discouraged workers have now given up altogether...