December jobs report: Only 74,000 added, “not in workforce” jumps 525,000

posted at 9:06 am on January 10, 2014 by Ed Morrissey

I think we can call this one unexpected. While the precursor reports suggested further weakening in the workforce participation rate, they also indicated a moderately decent number of jobs added. That’s not the case from the BLS, where the U-3 jobless rate dropped to 6.7% but only 74,000 jobs were added in December:

The unemployment rate declined from 7.0 percent to 6.7 percent in December, while total nonfarm payroll employment edged up (+74,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in retail trade and wholesale trade but was down in information.

The number of unemployed persons declined by 490,000 to 10.4 million in December, and the unemployment rate declined by 0.3 percentage point to 6.7 percent. Over the year, the number of unemployed persons and the
unemployment rate were down by 1.9 million and 1.2 percentage points, respectively. (See table A-1.)

Among the major worker groups, the unemployment rates for adult men (6.3 percent) and whites (5.9 percent) declined in December. The rates for adult women (6.0 percent), teenagers (20.2 percent), blacks (11.9 percent), and Hispanics (8.3 percent) showed little change. The jobless rate for Asians was 4.1 percent (not seasonally adjusted), down by 2.5 percentage points over the year. (See tables A-1, A-2, and A-3.)

Among the unemployed, the number of job losers and persons who completed temporary jobs decreased by 365,000 in December to 5.4 million. The number of long-term unemployed (those jobless for 27 weeks or more), at 3.9 million, showed little change; these individuals accounted for 37.7 percent of the unemployed. The number of long-term unemployed has declined by 894,000 over the year. (See tables A-11 and A-12.)

The civilian labor force participation rate declined by 0.2 percentage point to 62.8 percent in December, offsetting a change of the same magnitude in November. In December, the employment-population ratio was unchanged at 58.6 percent. The labor force participation rate declined by 0.8 percentage point over the year, while the employment-population ratio was unchanged. (See table A-1.)

The worst news comes in the workforce numbers. Those not in the workforce increased by 525,000 in December (91.808 million), after a one-time drop in the figure for November (91.283M from 91.756M in October).  That’s a big exodus of people from the workforce, dwarfing the meager number of jobs added in the economy. Part-time work remained essentially constant at 7.8 million, so the exodus points to an ugly, ugly trend.

Not surprisingly, that lead to a decline in the workforce participation rate, back down to 62.8%. That matches the 36-year low hit in October, which is one reason why the unhinged U-3 continues to drop.  The workforce number acts as the denominator for U-3, which means that the result will “improve” as the workforce declines. The U-6 metric, which considers more of those who are only marginally attached to the workforce, remains at 13.1%.

Reuters tries to pass this off on the weather:

U.S. employers hired the fewest workers in almost three years in December, but the setback was likely to be temporary amid signs that cold weather conditions might have had an impact.

Nonfarm payrolls rose only 74,000 last month, the smallest increase since January 2011, and the unemployment rate fell 0.3 percentage point to 6.7 percent, the Labor Department said on Friday. The unemployment rate was the lowest since October 2008 and in part reflected people leaving the labor force.

The step back in hiring is at odds with other employment indicators that have painted an upbeat picture of the jobs market. The data showed that 38,000 more jobs were added in November than previously reported.

Construction employment fell for the first time since May and leisure and hospitality payrolls rose marginally, suggesting that cold weather in some parts of the country had held back hiring. There were also declines in government employment.

Nonsense. This data is seasonally adjusted, and December wasn’t spectacularly cold. The polar vortex hit well after the new year (and may make a dent in January’s numbers).  This looks like an excuse for being blindsided by a bad report, because Reuters’ own economists predicted gains of 196,000 for December.

The Associated Press takes a more realistic view of the numbers, although Christopher Rugaber also blames cold weather for a drop in construction jobs:

U.S. employers added a scant 74,000 jobs in December, the fewest in three years. The disappointing gain ends 2013 on a weak note and could raise questions about the economy’s recent strength.

The Labor Department says the unemployment rate fell from 7 percent in November to 6.7 percent, the lowest level since October 2008. But the drop occurred mostly because more Americans stopped looking for jobs. The government counts people as unemployed only if they are actively searching for work.

Stock futures fell after the report was released.

The slowdown in hiring could cause the Federal Reserve to rethink its plans to slow its stimulus efforts. The Fed decided last month to cut back on its monthly bond purchases by $10 billion. It could delay further reductions until it sees evidence that December’s weak numbers were temporary.

Cold weather may have slowed hiring. Construction firms cut 16,000 jobs, the biggest drop in 20 months.

I doubt the Fed’s slight reduction in stimulus had this kind of impact, but that’s a better answer than cold weather in December. That is precisely why BLS uses seasonal adjustments, after all. CNBC brings up the Fed, too:

Fed policy has been contingent on two factors—a declining unemployment rate and low inflation. The central bank in December voted to cut its monthly quantitative easing program by $10 billion to $75 billion a month. Chairman Ben Bernanke has said that a 7.0 percent unemployment rate would serve as a rough guidepost for cutting the asset purchases, while 6.5 percent would be a benchmark for when to consider raising rates.

However, the combination of a declining labor force and a structural unemployment issue in which employers are reluctant to add jobs has made the labor dynamic more difficult to decipher.

“The discrepancy in the skills gap is huge,” said Tom Gimbel, CEO and president of LaSalle Network, a Chicago-based staffing firm. “I’m dealing with a thousand companies in Chicago and a few outside of Chicago that are looking to hire people and the skills are not there.”

But …

“The long-term unemployed would rather be unemployed than take a job for considerably less money than what they were making before,” he said. “The jobs are there for people willing to take a lower-paying job.”

Expect that to factor into the UI debate in the Senate.

Update: Jim Pethokoukis gives us the best overall look at the employment trend:

Update: Per David Freddoso, I’ve adjusted the headline a little. I’m taking the Household data, but BLS may adjust that for demographic purposes, so I want to be more specific about the nature of the data.

Update: Steve Eggleston does a deep dive on the data, as always, and produces this in the comments:

On the part-time front:

- 4,884,000 (seasonally adjusted) worked fewer than 35 hours due to slack work, an increase of 16,000 from last month.
- 2,592,000 (seasonally adjusted) worked fewer than 35 hours due to part-time work being all the work they could find, an increase of 93,000 from last month.
- 3,550,000 (not seasonally adjusted) worked both a full-time job and at least one part-time job, a drop of 41,000 from December 2012.
- 1,969,000 (not seasonally adjusted) worked multiple part-time jobs in lieu of a full-time job, a drop of 149,000 from December 2012.

 


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Comment pages: 1 2 3

Seems the commie Democrats could save some band width on their Party Platform, cut it to keep in simple.

“LIE”.

APACHEWHOKNOWS on January 10, 2014 at 2:45 PM

From ‘Hope and Change’ for ALL Americans to ‘Promise Zones’ of growth and prosterity for SOME areas of the country Obama has completely failed as a President.

There are now 92 MILLION AMERICANS NOT IN LABOR FORCE – 92 million americans who have given up and who are not even TRYING to get a job, who have been beaten down into submission and into forced addiction to Obama’s ‘big government’ socialist program dependency and addiction!

Obama is the biggest failure as President in our nation’s history & makes Jimmy Carter look like a friggin’ GENIUS!

easyt65 on January 10, 2014 at 2:49 PM

I’ve been investing heavily in steel, lead, brass, and plastic….

dentarthurdent on January 10, 2014 at 1:55 PM

.
IIRC, you’ve already invested in land.

Don’t forget appropriate electronics. Installed my old video surveillance system at my daughter’s house before the holidays so they have better situational awareness. Added a nice PTZ camera (23X optical zoom) to my system that can be triggered by one of the other cameras to provide better detail – as well as being controlled remotely if I am away from the house. I was noticing the other day – being able to look at one monitor and see 360 degrees around you regardless of time of day or weather gives SUCH a warm, fuzzy feeling.

PolAgnostic on January 10, 2014 at 2:49 PM

That’s exactly where Germany was – just before they decided to start rolling over the rest of Europe.
What are the odds something of that sort just might happen again?

dentarthurdent on January 10, 2014 at 1:57 PM

.
I doubt you would find a bookmaker on the planet willing to bet against it happening.

China vs Japan

China vs South Korea

China vs Phillipines

China vs Russia

(anyone noticing a trend here?)

Israel, Saudi Arabia, Gulf States vs Iran, Syria et al
(this one will end up with “glow in the dark” hot spots)

Any country in Africa vs Any country in Africa.

It is no longer a matter of IF … it is only a matter of WHEN

PolAgnostic on January 10, 2014 at 2:57 PM

PolAgnostic on January 10, 2014 at 2:57 PM

I could easily see something starting up in or onvolving Europe as well, given the number of EU countries going broke. Riots like Greece had over their austerity measures could easily flare up much bigger in other countries – especially with all the radical Muslims they already have causing trouble.

dentarthurdent on January 10, 2014 at 3:23 PM

IIRC, you’ve already invested in land.
PolAgnostic on January 10, 2014 at 2:49 PM

Not as much as I’d like.
My ideal plot would be at least a few hundred acres of empty prairie away from the city. Enough space so I could start picking off the “zombies” several hundred yards out from the house….

dentarthurdent on January 10, 2014 at 3:26 PM

PolAgnostic on January 10, 2014 at 2:57 PM

And don’t ignore the possibility that 0barky could be the one to start something, when everything here starts to collapse.
And marshall law could very well be his first move if the Emperor decides he doesn’t really want to leave the WH – and that just might result in a pretty good flare up in this country….

dentarthurdent on January 10, 2014 at 3:33 PM

“Thank you, President Obama!”

Dr. ZhivBlago on January 10, 2014 at 4:14 PM

No need for a press conference. Move along now.

alanstern on January 10, 2014 at 4:19 PM

Just a note: it is NOT correct to say the people who have “left the workforce” aren’t trying to get jobs OR have given up looking. Those things aren’t even measured.

What happens is that once someone exhausts their unemployment benefits, the Labor Department drops them automatically from the labor force. They no longer are counted as “unemployed.”

There is little evidence that any of them are actually “discouraged workers,” although of course many are – but it is assumed, not known.

Adjoran on January 10, 2014 at 5:16 PM

…we need another STIMULUS!/

KOOLAID2 on January 10, 2014 at 5:25 PM

…we need another STIMULUS!/

KOOLAID2 on January 10, 2014 at 5:25 PM

What do you think the 5 ‘promise zones’ are….?

Athos on January 10, 2014 at 5:40 PM

…we need another STIMULUS!/
 
KOOLAID2 on January 10, 2014 at 5:25 PM

 
The stimulus never stopped.
 
No joke. It’s why Reid and Obama won’t pass a budget.
 
We’re at $5 trillion (with a T) and counting.

rogerb on January 10, 2014 at 6:17 PM

“The jobs are there for people willing to take a lower-paying job.”

Double weird. This is precisely the argument that conservatives use against the minimum wage. It seems that “market forces” are forcing Americans into lower pay scales. Isn’t it the American worker’s job to simply accept whatever employers are willing to pay them? One does wish that conservatives could be intellectually consistent. Then again, one wishes for free tickets to the next Beyoncé concert as well…..

libfreeordie on January 10, 2014 at 12:34 PM

I’m going to let Professor of Economics at George Mason University Walter E. Williams take you to grade school, Komrade:

Minimum Wage Hikes Are Great Politics for Leftists, Bad Economics for Lowest Income Earners

How about the politics of the minimum wage? In the political arena, one dumps on people who can’t dump back on him. Minimum wages have their greatest unemployment impact on the least skilled worker. After all, who’s going to pay a worker an hourly wage of $10 if that worker is so unfortunate as to have skills that enable him to produce only $5 worth of value per hour? Who are these workers? For the most part, they are low-skilled teens or young adults, most of whom are poorly educated blacks and Latinos. The unemployment statistics in our urban areas confirm this prediction, with teen unemployment rates as high as 50 percent.

The politics of the minimum wage are simple. No congressman or president owes his office to the poorly educated black and Latino youth vote. Moreover, the victims of the minimum wage do not know why they suffer high unemployment, and neither do most of their “benefactors.” Minimum wage beneficiaries are highly organized, and they do have the necessary political clout to get Congress to price their low-skilled competition out of the market so they can demand higher wages. Concerned about the devastating unemployment effects of the minimum wage, Republican politicians have long resisted increases in the minimum wage, but that makes no political sense. The reason is the beneficiaries of preventing increases in the minimum wage don’t vote Republican no matter what; where’s the political quid pro quo?

-snip-

During South Africa’s apartheid era, racist labor unions were the country’s major supporters of minimum wage laws for blacks. Their stated intention was to protect white workers from having to compete with lower-wage black workers. Our nation’s first minimum wage law, the Davis-Bacon Act of 1931, had racist motivation. Among the widespread racist sentiment was that of American Federation of Labor President William Green, who complained, “Colored labor is being sought to demoralize wage rates.”

Discuss.

Del Dolemonte on January 10, 2014 at 6:49 PM

I could easily see something starting up in or onvolving Europe as well, given the number of EU countries going broke. Riots like Greece had over their austerity measures could easily flare up much bigger in other countries – especially with all the radical Muslims they already have causing trouble.

dentarthurdent on January 10, 2014 at 3:23 PM

.
I think Europe is going to be like watching a time lapse film of a decaying animal. The rot and putrescence are already there but will boil to the surface with far right groups targeting the Muslims and the far left groups demanding “examples” being made of the “elites”.

This time around, my money is on the far right groups coming out on top.

We’ll have shooting wars in the Middle East and Asia by that point in time.

PolAgnostic on January 10, 2014 at 7:10 PM

where the U-3 jobless rate dropped to 6.7% but only

You need to remind the troops about the U1-6 rates that the feds track, and remind everyone that U6 is the ACTUAL unemployment rate.

It currently stands at 11.6% IIRC.

Who is John Galt on January 11, 2014 at 12:59 AM

Linked: Right Wing Extremists!

Reaganite Republican on January 11, 2014 at 8:46 AM

Have we reached Greecian levels yet? Any real recovery or prosperity in our country will always be just out of reach or over a horizon or just another 2nd step away with the bunch currently running things in DC. Wait for amnesty to happen and all those lesser paying jobs Americans won’t do because they used to make a lot more are taken by the newest among us. We are losing our country from the inside.

Kissmygrits on January 11, 2014 at 9:41 AM

It’s only 525000 people.

CWchangedhisNicagain on January 11, 2014 at 6:00 PM

“The jobs are there for people willing to take a lower-paying job.”

Double weird. This is precisely the argument that conservatives use against the minimum wage. It seems that “market forces” are forcing Americans into lower pay scales. Isn’t it the American worker’s job to simply accept whatever employers are willing to pay them? One does wish that conservatives could be intellectually consistent. Then again, one wishes for free tickets to the next Beyoncé concert as well…..

libfreeordie on January 10, 2014 at 12:34 PM

Actually, triple weird. It’s precisely those jobs the democrats are trying to destroy by mandating they be paid 10 or 15 or 25 dollars per hour.

WryTrvllr on January 11, 2014 at 11:40 PM

Gosh, Libfree, there is so much ignorance in that quote it’s tough to parse. Where did all your heavily unionized “market force” high paying jobs go?

WryTrvllr on January 11, 2014 at 11:43 PM

The December jobs report – more ugly
by Steve Eggleston | January 11th, 2014

ITguy on January 12, 2014 at 12:58 AM

Once the market crashes it will get really ugly.

claudius on January 13, 2014 at 12:01 AM

Comment pages: 1 2 3