Underemployment Rate Soars To 14.3%

So much for any doubts about a September taper: with the street expecting a 165K NFP number for June, the actual print of 195K following an upward revised May print of 195K as well, means the Fed's September flow fade, aka Taper, is now virtually assured. On the other side, the Household Survey printed a 160K increase in jobs.

The Unemployment Rate stayed at 7.6% despite expectations of a drop to 7.5%, although the real action was in the underemployment rate which exploded from 13.8% to 14.3%. The Civilian Labor Force rose once again, printing at 63.5% with the labor force rising from 155,658
to 155,835. Read more >>

Class of 2013 faces grim job prospects

The Class of 2013 will face an "extremely difficult" job market when college students graduate in the months ahead, according to a new research report. Unemployment remains high for young college grads. For those who will find jobs, many will probably have to settle for low-level positions, the Economic Policy Institute said Wednesday.

The unemployment rate for recent college grads between the ages of 21 to 24 has averaged 8.8% over the last year, according to Labor Department data. Once you also include young grads who are working part-time for economic reasons, and those who have stopped looking for a job in the last year, the so-called "underemployment rate" is a whopping 18.3%.
Sure, the job market has improved during the past few years. But both these rates remain higher than pre-recession levels.

Meanwhile, graduating in the wrong place at the wrong time is likely to affect the earnings potential of these students over their entire careers.
"On average, they are not going to do well," said Heidi Shierholz, an EPI economist and co-author of the report. "They will face lower earnings, than they otherwise would have, for maybe the next couple of decades." Read more >>

Gallup: 18% unemployed or underemployed

bizjournals.com

More than 18 percent of U.S. workers say they are either unemployed or underemployed, according to a Gallup Organization survey.

The running survey of U.S. workers shows 81.5 percent of them have jobs, but the national unemployed/underemployed number has been between the high-teens and 20 percent throughout the year. Gallup surveys 19,800 American workers each month.

The U.S. unemployment rate stands at 9.5 percent, according to July numbers from the U.S. Bureau of Labor Statistics. Arizona’s unemployment rate is 9.6 percent, according to June figures from the Arizona Department of Commerce. Underemployment also is an issue in Arizona as many laid-off workers turn to part-time service and retail jobs while they look for full-time jobs.

Fake +290K Payrolls "Added", Real Number Is 36K

290K of which census was 66k and Birth Death was 188k. Hurray -the economy added a real 36k in jobs in April. Still, we are curious how the Chairman will not be forced to discuss tightening after this B/D adjustment inspired number (188K in April B/D, 81K in March). And in the meantime, headlines will read Unemployment back to 9.9%, and Underemployment back to 17.1%. Record jittery market bounces than calms down again. More...

Gallup: Underemployment In The U.S. Rises to 20.3% in March

By Dian L. Chu, Economic Forecasts and Opinions
The number of long-term unemployed (more than 27 weeks) in March rose to more than 6.5 million. The percentage of people unemployed for 27 weeks or more also rose to a record 44.1% of all jobless.

The Labor Dept. figures also showed average earnings per hour dropped last month and the number of people working part-time because they couldn’t find full-time work increased.

A Rise in The Underemployed
The underemployment rate -- which includes the part-timers and people who want work but have given up looking - - increased to 16.9% from 16.8%, based on government data, seasonally adjusted.

However, the latest Gallup Daily tracking finds that 20.3% of the U.S. workforce was underemployed in March-- a slight uptick from the relatively flat January and February numbers. Gallup employment data are not seasonally adjusted. (See chart)

Gallop concludes its findings as follows:

As unemployed Americans find part-time, temporary, and seasonal work, the official unemployment rate could decline. However, this does not necessarily mean more Americans are working at their desired capacity. It will continue to be important to track underemployment -- to shed light on the true state of the U.S. workforce."

Meaningful Job Creation = More Budget Deficits
So what can be done?

Congress has extended unemployment benefits for longer periods to help workers cope. A jobs bill Congress recently passed gives employers a tax credit for hiring workers unemployed for two months or more.

Such credits don't actually create jobs. A new infrastructure program, for example, would certainly help the 24.9% unemployed Americans in the construction sector.

Unfortunately, any meaningful job creation programs would require more deficit spending on a new stimulus bill, which is politically impossible in an election year.

So, we are pretty much in the predicament as described by Secretary Geithner in a recent inteview at NBC’s "Today" show,

"[The unemployment rate] is still terribly high and is going to stay unacceptably high for a very long time,"

Overly Optimistic Markets?
Meanwhile, markets have turned increasingly bullish on economic growth sending the S&P 500 Index and the Dow Jones Industrial Average to their highest closes in 18 months.

Although the course of the economy and markets is generally heading towards the positive direction, the grim labor market outlook could come into play sooner rather than later, among some other downside risk factors. From that perspective, stocks may have been fully priced or even gotten ahead of themselves.

Underemployment Hits 20% in Mid-March

Dennis Jacobe, Chief Economist

PRINCETON, NJ -- Gallup's underemployment measure hit 20.0% on March 15 -- up from 19.7% two weeks earlier and 19.5% at the start of the year. Gallup Daily tracking makes it possible to monitor the underemployment rate throughout the month, rather than just once per month, making it the best and most timely way to measure the U.S. jobs situation.

The findings underscore why Americans say the most important problem facing the nation today is jobs and unemployment. Gallup's underemployment measure is based on more than 20,000 phone interviews collected over a 30-day period and reported daily. Gallup's results are not seasonally adjusted and tend to be a precursor of government reports by approximately two weeks.

More Part-Time Employees Seeking Full-Time Work

Gallup classifies Americans as underemployed if they are unemployed or working part-time but wanting full-time work. On March 15, Gallup's unemployment rate was 10.3% -- essentially the same as the 10.4% of March 1, but down from 10.8% in mid-February. However, this decline in the percentage of unemployed Americans was more than offset over the past 30 days by an increase in the percentage of those working part-time but wanting full-time work, from 9.0% in mid-February to 9.7% in mid-March.

Gallup's data suggest that while the U.S. unemployment rate has declined over the past month, the employment gains may be largely taking the form of new part-time jobs. Many of those acquiring these new jobs may be Americans who find that, although they would prefer to be working full-time, only part-time work is available.

Focus on Underemployment, Not Unemployment

Even with historic healthcare legislation under consideration, Congress passed and the president signed a new jobs creation bill on March 18. No doubt, national attention will shortly shift to unemployment and anticipation of the government's April 2 report of the March unemployment rate. In this regard, Gallup's mid-March unemployment rate is likely indicative of the not-seasonally adjusted unemployment rate the government will release in April, as is Gallup's broader underemployment rate.

The danger associated with focusing on unemployment is reflected by the recent statement of Morgan Stanley economists suggesting that the U.S. may add as many as 300,000 jobs in March owing to an improvement in the weather, economic growth, and the government's hiring of temporary census workers. If anything close to this number of new jobs is announced by the government in early April, there is likely to be an enthusiastic, possibly even celebratory, response. Government officials are liable to tout the continued benefits of last year's stimulus and the future benefits of the new jobs bill. Many Wall Streeters will likely argue that the surge in jobs is simply another confirmation of the strength of the overall economic recovery.

However, before policymakers celebrate too much, they should note Gallup's recent findings involving its new, more inclusive measure of underemployment. To be sure, there are some benefits associated with the unemployed getting part-time jobs, no matter the source. For example, Gallup's self-reported spending data show that part-time workers who want full-time work spent on average 24% more per day ($51) during the past 30 days than did the unemployed ($41). While this represents an improvement and is good for the economy, it is not nearly as good as the 85% higher daily spending of those having full-time jobs ($76).

It is also often suggested that a growth in part-time jobs may indicate future growth in full-time work -- that companies hire part-time workers before committing to hiring new full-time employees. While this is sometimes the case, it may not be so at this point in the U.S. economy: Gallup data show that one in three part-time employees who are wanting full-time work are currently "hopeful" about finding a full-time job in the next 30 days -- not much of an endorsement of the idea that today's new part-time work will progress to full-time jobs.

Regardless of how one interprets the shifts taking place between part-time and full-time jobs, it is important that policymakers focus on the broader goal of reducing underemployment, not just unemployment. Part-time, temporary jobs like those associated with census-taking are far better than no job and may reduce the unemployment rate, but they do not represent the kind of job creation needed for a sustainable economic recovery.