Gallup: Unemployment likely up in October
posted at 10:12 am on November 4, 2010 by Ed Morrissey
Tomorrow, the Department of Labor will release its estimate of unemployment for October, and Gallup says to prepare for an increase from the current 9.6% to as high as 9.9%. The news isn’t all bad, though, as Gallup says that the DOL calculations will miss a small hiring binge at the end of the month, although that doesn’t take into account seasonal adjustments:
Gallup analysis suggests the October unemployment rate that the government reports on Friday will be in the 9.7% to 9.9% range. This is despite the fact that unemployment, as measured by Gallup without seasonal adjustment, fell sharply to 9.4% at the end of October — down from10.0% in mid-October and 10.1% at the end of September. Most of this drop took place after the official Labor Department measurement period, suggesting the government’s October report may not pick up this late-month decline.
The sharp drop in Gallup’s unemployment rate in late October was driven in part by an improvement in the employment situation among men, as their unemployment rate fell by more than one percentage point. The unemployment rate among women was essentially unchanged. Unemployment among those aged 18 to 29 in October was 13.8%, an improvement of two points.
We saw the same trend in reverse in September, when a late-month drop in employment got missed by the DOL in their October release. However, one has to consider that the seasonal adjustments used by Labor will already take this into account. Retailers and others often start adding to staff in late October and early November to prepare for the Christmas shopping season, and Gallup’s unadjusted figures may be reflecting that rather than an actual, seasonally-adjusted increase in less seasonal hiring.
The news doesn’t get much better, either. Overall unemployment was higher in the second quarter of this year than in 2009Q2, according to a new report by Labor, and the average length of unemployment has increased sharply over the past year of “recovery” (h/t DogSoldier):
The number of long-term unemployed workers has increased sharply since the recession began in December 2007.1 In the second quarter of 2010, about 46 percent of the 14.6 million unemployed persons were jobless for 27 weeks or longer and about 31 percent were unemployed for 52 weeks or longer. This report focuses on the latter group – those who have been jobless for a year or more.2
The number of persons jobless for a year or more rose from 645,000 in the second quarter of 2007 to 4.5 million in the second quarter of 2010. The group’s share of total unemployment jumped from 9.5 percent to a record high of 30.9 percent. (See chart 1.) As a share of the labor force, the proportion jobless for a year or longer rose from 0.4 percent in the second quarter of 2007 to 2.9 percent in the second quarter of 2010, also a record high for the series. (See chart 2.) Some researchers have attributed the rise in long-term unemployment to the tendency of firms to hire individuals who have been jobless for shorter durations first, thus increasing the share of unemployed persons who have been jobless for very long periods.3 Others have found that declining worker turnover rates have led to increased unemployment durations for those workers who involuntarily lost their job during the recent recession.4 It also has been suggested that the availability of extended unemployment insurance benefits has contributed to the increase in unemployment duration, although some researchers have argued that the extension of unemployment benefits has had a limited impact on unemployment duration in the recent recession.5
The DOL couches its analysis in a three-year perspective, but their chart shows that the problem continued to grow from summer 2009 to “Recovery Summer”:
We’re not putting America back to work. If anything, we’re extending the misery. The number of unemployed rose from 2009Q2 to 2010Q2, and that doesn’ take into account all of those who came of working-adult age during that period — approximately 1.2 million more Americans.
Finally, after a drop last week, initial job claims rose again to remain firmly in the narrow and high 2010 range. Reuters, of course, found this mildly surprising:
New U.S. claims for unemployment benefits rose more than expected last week, government data showed on Thursday, underlining the persistent weakness in the labor market.
Initial claims for state unemployment benefits increased 20,000 to a seasonally adjusted 457,000, the Labor Department said, reversing the prior week’s decline.
Analysts polled by Reuters had forecast claims rising to 443,000 from the previously reported 434,000. The government revised the prior week’s figure up to 437,000.
Just as we have seen all year long, the economy is not creating jobs in sufficient quantity to absorb worker turnover. We have been at this level consistently over the last 12 months now, indicating economic stagnation at almost zero-growth levels. If that surprises Reuters, then they need new prognosticators.