Gave up looking

[pinqy]

Ok, this is a pet peeve of mine. A few times now, the Labor Force has gone down, and that has caused the Unemployment rate (Unemployed/Labor Force) to go down as well. Many in the media report that as "people giving up looking for work" which is misleading.

Let's look at the Labor Force Flows, the gross changes and see what happened.

In the week ending July 14, 2012, there were 142,220,00 Employed and 12,794,000 Unemployed, for a Labor Force of 155,013,000

By the week ending August 18, 2012 the following changes occurred:
Employed: 2,117,000 people lost/left their jobs and started looking for a new job (became Unemployed). No loss to Labor Force.
4,100,000 lost/left their job and did not start looking for work (includes retirees, students, injuries/illlness, just hadn't started looking yet, etc). So -4,100,000 to the Labor Force.
24,000 died, left the country, entered active duty military, went to prison, or were institutionalized (left the population). So another -24,000 to the Labor Force for a total of -4,124,000 from the Labor Force.

At the same time,3,789,000 people who hadn't been looking for a job started looking and found work. And 55,000 people joined the population and got a job (turned 16, immigrated, left the military/prison/institution). For a gain of +3,844,000 to the Labor Force as Employed.

Unemployed (looking for work):
2,278,000 found jobs and became Employed (no change to the Labor Force).
2,909,000 did not look for work between the surveys (illness, injury, waiting to start new job, familiy/transportation issues, decided didn't need a job, gave up in discouragement) for a change of -2,909,000
2,000 died, left the country, entered active duty military, went to prison, or were institutionalized (left the population). So total of -2,911,000 from the Labor Force.

At the same time, 2,813,000 people who hadn't been looking for work started looking, and 9,000 joined the population looking for work (turned 16, immigrated, left the military/prison/institution), for a gain of +2,822,000 to the labor force.

So adding things up, 4,395,000 people just switched status within the labor force...employed to unemployed or unemployed to employed.

7,035,000 left the labor force (4,124,000 from Employed and 2,911,000 from Unemployed)
6,602,000 joined the labor force (3,844,000 to Employed and 2,822,000 to Unemployed).
Net change of -369,000 to the Labor Force.

Yes, that can be kind of confusing and complicated. That's kind of my point. While certainly some of those 2.9 million who stopped looking for work "gave up," most of them stopped looking for other reasons than discouragement (the number of discouraged actually went down) and most of the people who left the labor force had been Employed and didn't look at all during the 4 weeks between surveys..so hardly "gave up looking."

In short, the Labor Force dropped, which is not good, causing the UE rate to go down for the wrong reasons. But it is Inaccurate to portray that as "people giving up looking," which implies discouragement. Someone who stopped looking for work in order to look after the kids, or who hurt themselves and couldn't work so didn't look cannot accurately be called "giving up."

 

[Paulie]

It doesn't take into consideration people working off the books, which is a LOT in the construction industry.

Employment stats are pointless, and even more pointless is arguing about them.

 

[pinqy]

It doesn't take into consideration people working off the books, which is a LOT in the construction industry.

Yes, it does. The official Jobs numbers don't, but the Labor Force stats certainly do.

 

[Truthmatters]

many boomers have decided to retire instead of working after being laid off.


pretending we are not about to see huge groups of people leaving the work force permenantly is to deny this huge group has directed nearly everything in the economy since they began being born is such large numbers.

 

[Paulie]

It doesn't take into consideration people working off the books, which is a LOT in the construction industry.

Yes, it does. The official Jobs numbers don't, but the Labor Force stats certainly do.

Really? Because I know guys who've been off the books for years. Some work for me.

 

[pinqy]

many boomers have decided to retire instead of working after being laid off.


pretending we are not about to see huge groups of people leaving the work force permenantly is to deny this huge group has directed nearly everything in the economy since they began being born is such large numbers.

While it has had an effect, it hasn't been that large. While more people are 65 and older as a percent of the population, the percent of those 65+ who are in the labor force has gone up as well. The biggest factor on the drop in the labor force has been with the young...16-24 year olds.

 

[Ravi]

It doesn't take into consideration people working off the books, which is a LOT in the construction industry.

Yes, it does. The official Jobs numbers don't, but the Labor Force stats certainly do.

Really? Because I know guys who've been off the books for years. Some work for me.

Dude. You just admitted that you're a criminal.

 

[pinqy]

It doesn't take into consideration people working off the books, which is a LOT in the construction industry.

Yes, it does. The official Jobs numbers don't, but the Labor Force stats certainly do.

Really? Because I know guys who've been off the books for years. Some work for me.

The Labor Force stats come from a household survey. It just asks if someone has been working, doesn't ask if it was "on the books." And the information is confidential and it would be illegal for any info about work to be given to the IRS or anyone else except for purely statistical purposes.

 

[Paulie]

Yes, it does. The official Jobs numbers don't, but the Labor Force stats certainly do.

Really? Because I know guys who've been off the books for years. Some work for me.

Dude. You just admitted that you're a criminal.

I also frequently change lanes without using a turn signal

 

[Paulie]

Yes, it does. The official Jobs numbers don't, but the Labor Force stats certainly do.

Really? Because I know guys who've been off the books for years. Some work for me.

The Labor Force stats come from a household survey. It just asks if someone has been working, doesn't ask if it was "on the books." And the information is confidential and it would be illegal for any info about work to be given to the IRS or anyone else except for purely statistical purposes.

I honestly didn't know that.

 

[oldfart]

Ok, this is a pet peeve of mine. A few times now, the Labor Force has gone down, and that has caused the Unemployment rate (Unemployed/Labor Force) to go down as well. Many in the media report that as "people giving up looking for work" which is misleading.

The best source for employment data is the Monthly Labor Report available the first Friday of the month at 8:30 A.M. at U.S. Bureau of Labor Statistics. Go to the tables at the bottom and look for A-15 "Alternate measures of unemployment". Most labor economists rely on a combination of U-6 and the figure for employment as a percentage of working age population (ten year graph at Bureau of Labor Statistics Data. Everything else is pretty much slice and dice of the BLS numbers. At the bottom of the first hyperlink are links to historical series for all tables, which in the Report only go back one year.

Jamie

 

[expat_panama]

...Labor Force stats come from a household survey. It just asks if someone has been working, doesn't ask if it was "on the books." And the information is confidential...

So what we really got is the BLS has no info on what % of the labor force is off the books.

Nor does it know which % is lying; we don't know how much of those leaving the labor force are doing something illegal, be it anything from failing to file to peddling narcotics. What we do know is that while total reported employment fell to the tune of say, 10 million and stayed there--

--total spending recovered and returned to previous trends years ago. People who aren't saying they're working are still spending $ big time.

 

[expat_panama]

...People who aren't saying they're working are still spending $ big time.

Or not.

Looking again, this thing with have from 2010-2012 of spending increasing w/o changes in the labor force--

--is the same thing we had 2006-2008. The impact of lower % employed is that spending's never returned to previous trends.


That's private spending; gov't spending going like gangbusters...

 

[MisterBeale]

Yes, it does. The official Jobs numbers don't, but the Labor Force stats certainly do.

Really? Because I know guys who've been off the books for years. Some work for me.

Dude. You just admitted that you're a criminal.

Oh really?

31 Questions and Answers about the IRS, Revision 3.4

 

[pinqy]

Really? Because I know guys who've been off the books for years. Some work for me.

The Labor Force stats come from a household survey. It just asks if someone has been working, doesn't ask if it was "on the books." And the information is confidential and it would be illegal for any info about work to be given to the IRS or anyone else except for purely statistical purposes.

I honestly didn't know that.

Let me correct myself a little...."off the books" employment "may" appear in the household survey. Obviously not eveyone would mention it, despite confidentiality. But even accounting for the methodological differences between the household survey and the payroll survey (the official "jobs created/lost" numbers) there is still a gap where the household numbers are usually hgiher and part of that will be off the books employment.

 

[pinqy]

Really? Because I know guys who've been off the books for years. Some work for me.

Dude. You just admitted that you're a criminal.

Oh really?

31 Questions and Answers about the IRS, Revision 3.4

And how many of those claims have been held up in court? And how many of those claims have the courts ruled against? A legal claim is pretty pointless if the courts consistantly rule against them...which they have.

 

[MisterBeale]

Fair enough. I'm not much for corrupt politicians and corrupt courts to tell you the truth. When the system is corrupt, do you have a moral obligation to follow it's codes? Or if you can skirt them and get away with it, is that your right?

We all know they are constantly skirting them because of this knowledge, don't we?

 

[oldfart]

Really? Because I know guys who've been off the books for years. Some work for me.

Dude. You just admitted that you're a criminal.

Oh really?

31 Questions and Answers about the IRS, Revision 3.4

Yes really. You should swear off reading the looney tunes like the link you posted. Before 1874 Acts of Congress were not codified and were published individually. The Revised Statutes of the United States, approved June 22, 1874, effective for the laws in force as of December 1, 1873 provided the first codification of the laws of the United States. Title 35 of the Revised Statutes was the Internal Revenue title. In 1919, a committee of the U.S. House of Representatives began a project to recodify U.S. statutes, which eventually resulted in a new United States Code in 1926 (including tax statutes as Title 26). The Internal Revenue Code (IRC) is usually cited in tax publications as IRC Sec 86 for example. In legal reporting services it will be cited as 26USC 86.

Look it up for yourself instead of linking to tax protester sites. BTW, the IRS will cheerfully clean out your bank accounts and seize your real estate to the extent allowed by the theoretically non-existent tax law (if you actually believe the protestor arguments) just as quickly whether you believe it is law or not.

 

[oldfart]

Let me correct myself a little...."off the books" employment "may" appear in the household survey. Obviously not eveyone would mention it, despite confidentiality. But even accounting for the methodological differences between the household survey and the payroll survey (the official "jobs created/lost" numbers) there is still a gap where the household numbers are usually hgiher and part of that will be off the books employment.

Reconciling the "household survey" data with the "establishment survey". has always been a question. I rather like the problem, because in most areas we only get one statistic, with no real way to gauge its accuracy in the way we can the employment data.

A few years ago there was a methodological note on the BLS website (which of course I now cannot find) which addressed this question. The consensus then was the largest variance had to do with self-employed "independent contractor" individuals. When asked if they are employed in the household survey, they normally answer "yes" if they have a contract, whether or not they perform significant services or realize significant income at the time. I posted some anecdotal evidence from my tax practice which supported other people's observations; it's a murky dividing line. We can look at the SOI statistics from tax return data on Schedules C filed to approximate the number of self-employed individuals who do not show up on the establishment survey, but at lest that is annual data and usually eighteen months or so old, so it doesn't help reconcile monthly data in the current year. Remember this isn't about somebody lying or doing something wrong; the country has millions of workers in construction and service trades who get paid on a Form 1099 and file Schedule C.

 

[Freemason9]

It doesn't take into consideration people working off the books, which is a LOT in the construction industry.

Employment stats are pointless, and even more pointless is arguing about them.

Or in the drug trade. Don't forget the billions of dollars in the U.S. economy from the illegal drug trade. Illegal drugs have built some amazingly big houses on the edges of many a golf course.