Commentary on the July 2014 BLS Jobs Report

The July “Employment Situation” Report from the BLS has stimulated a range of responses. On the plus side for workers, over 200,000 additional people were employed compared to June. This extended the string of positive jobs numbers for private sector employers to 52 months, among the longest on record. Over the past 12 months, the US economy has generated a little over 2 million new jobs.

So, what can we say about who is and isn’t employed? And, are there any concerns that remain about the recovery from the “Great Recession?”

The answer to the latter question is, unfortunately, yes. And that yes is connected to the who has – and more to the who has not – the jobs that have been created over the 5+ years since the official end of the Great Recession.

The table below places the most recent employment numbers in context. The dates are (i) Nov 2007, the last month before the official onset of the Great Recession; (ii) June 2009, the official end of the Great Recession; and (iii) the most recent Employment Situation report form the BLS (for July 2014).

Most recent employment numbers in context

The total population of the US has grown by almost 6.5%, or more than 8 million people, since the onset of the Great Recession. However, the number of people with jobs has barely increased – only 150,000 more people are employed than was the case in November 2007. There are somewhat more women employed today than in November 2007 and somewhat fewer men employed. However, the big numbers are the people who are “not in the labor force.” In 11/07 there were 30.2 million men and 48.9 million women classified as “not in the labor force, or 79.1 million total; in July 2014 these numbers were 36.7 and 55.2 million, respectively, or 91.9 million in total. The civilian population grew by slightly over 15 million between 11/07 and 7/14; over 85% of this growth went into the “not in the labor force” category.

The BLS defines “not in the labor force” as people neither employed nor unemployed, i.e. not holding a job nor looking for one. These can be people in school, taking care of family members – or people who have simply dropped out of the labor force because of lack of job opportunities. The latter can be thought of as “missing workers.” Missing workers are not necessarily happy to be neither employed nor unemployed. Many would be employed (and others would be actively seeking employment, thus classified as “unemployed”) if the US economy were working for us all. The most recent estimate of the number of “missing workers” – people who, in a well-functioning economy would be in the labor force – is almost 5.9 million people. Over half are people in the 25 – 54 age range, prime working years.

Another way to see this effect to look at “Household Survey” data on post-war recessions. In July 2014 the Household Survey showed an employment loss in July of 21,000. The Household survey includes non-wage and salary workers, and workers in agriculture, neither of whom are covered in the establishment survey upon which the “jobs” numbers above are based. The establishment survey covers only wage and salary employees on the payrolls of nonfarm establishments. Figures 1 and 2 below are based on the (more comprehensive) “Current Population Survey” (CPS) or household survey of employment. They both starkly illustrate the massive job loss and current lack luster recovery from the “Lesser Depression”.

Note that “Business Cycles” are measured from “peak to peak” or “trough to trough” where a “peak” is that point at which a new “recession” or “downturn” begins, and a “trough” the point at which the “expansion” or “upturn” out of a recession starts. In Figures 1 and 2 post-war recessions are graphed from “peak to peak.” In this sense we are still in the “Lesser Depression” or June 2009 recession and do not know when it’s “peak” will occur as the economy is still expanding and the next recession has not started. June 2009 is the official National Bureau of Economic Research (NBER) designated “trough,” or tart of the expansion phase of the Lesser Depression. The NBER Business Cycle committee is the official body that designates the starting and ending points of U.S. recessions (see: In Figures 1 and 2 post-war business cycles are labeled, and centered around, their NBER designated “troughs.”

Figure 1: Percent Decline in Employment to Population Ratio from Start of Recession for Post War Business Cycles (Business Cycles Labeled and Centered Around Official Trough Date at “0” Marker on Horizontal Axis)

Percent Decline in Employment to Population Ratio from Start of Recession for Post War Business Cycles

Note almost no improvement in regaining the employment share that prevailed in November 2007 before the start of the “Lesser Depression” – or June 2009 Recession.
Some commentators have argued that Figure 1 does not present an accurate picture of the relative health of the labor market as it does not take into account the aging of the labor force which has led to a trend reduction in the labor force participation rate relative to past years (see: Figure 2 below takes labor force aging into account by doing the analysis by population age cohorts (16-24, 25-54, and 55 and over) and holding the shares of the age cohorts constant in the population at July 2014 levels.
As can be seen labor force aging can explain some of the drop in participation but not much. Percentage Employment loss is still far greater than any prior post-war recession.

Figure 2: Same as Figure 1, but Using Employment to Population Ratio by Population Age Cohort (16-24, 25-54, 55 and over) and Assuming that these Population Age Cohorts are Fixed at their July, 2014 Population Shares.

Same as Figure 1, but Using Employment to Population Ratio by Population Age Cohort

As of July 2014, the “expansion” from the official June 2009 “trough” of the Lesser Depression has gone on for 60 months or five years. In these five years of expansion about 1.5% of the 6.5% employment loss due to the Lesser Depression has been recovered (based on the age demographic “adjusted” analysis of Figure 2). At this rate of “recovery” it will take more than 15 more years of expansion (or a total of 20 years of continued expansion) to get back to the employment levels of late 2007, a highly unlikely occurrence as the longest post-war expansion on record (July 1990 to March 2001) was less than 11 years long and the average post-war expansion is 81 months or less than 7 years in duration (see:

In addition, the lack of income for missing workers is frequently a story of careers cut short, dreams deferred, hopes destroyed. These are personal tragedies that, in an economy organized for people rather than for profits, would not occur. However, even if this does not move you, think about the economic loss that we suffer: the foregone output from 5.9 million missing workers is over $2 trillion.

The private sector has demonstrated that it can generate a modest level of employment growth. However, the result remains one of labor market stagnation and missing workers. Without public action – government job creation – the US economy will continue to fail the fundamental test that all modern economies should meet: to generate living wage jobs for all willing and able to work.

In early July, CPEG joined other groups from around the country in Washington D.C. to demand that Congress respond to the continuing failure of our economy. Of course Rep. John Conyers in HR 1000, the 21st Century Humphrey-Hawkins Full Employment and Training Act was a major focus. Equally important, however, we created a National Jobs for All Network. The Network is now planning actions for a fall campaign around the jobs: stay tuned.

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