Demograhics of Joblessness

Demograhics of Joblessness - Analyst Blog

This month’s employment report was solid, not great, but much better than expected, particularly when the revisions to previous months are considered. When the revisions are added to the September numbers, we were up 202,000 in total and 217,000 on the private sector side, according to the establishment survey.

Not all demographic groups were hit equally hard in the downturn, and they have not fared equally in the very slow climb out of the downturn. In this post I focus on the demographics of joblessness.

Demographics of Joblessness

This recession has hit men harder than it has hit women. However, over the past year, things seem to be “evening out” between the genders, and this month that evening out continued. In September, the unemployment rate for adult men (over 20) fell to 8.8% from 8.9% in August. It is down from 9.7% a year ago.

The year-over-year decline is partly an illusion though as the participation rate for men fell from 74.2% a year ago to 73.4% in September, but rose from 73.3% in August. Thus the monthly drop in the unemployment rate for men was actually bigger than it appears. The employment rate for men rose to 66.9% from 66.8% in August, but is unchanged from a year ago.

For women, the unemployment rate rose from 8.0% in August to 8.1% in September, and also from 8.0% a year ago. The participation rate was 59.8%, up from 59.7% August, but down from 60.3% last year. The employment rate rose to 55.0% from 54.9% last month, but is below the 55.5% rate a year ago.

Thus, on a month-to-month basis, the employment situation actually got a little bit better for women, not worse as just looking a t the unemployment rate would indicate. On the other hand, relative to a year ago there has been much more deterioration than the slight tick up in the unemployment rate would indicate.

Employed Teenagers

Teens, regardless of gender have had a very hard time of it in this recession. Just go to a McDonald's (MCD) and you will see this for yourself. Normally the blemishes you see on the cashiers face is acne, not liver spots, as is the case now.

Things got a little bit better for teens in September. The teen unemployment rate fell to 24.6% from 25.4% in August, and is down from 26.0% a year ago. The improvement is real, but the levels are still horrific. The participation rate was unchanged at 34.5% and up from 34.2% a year ago.

The percentage of teens that actually have a job rose to 26.0% in September from 25.7% in August, and up from 25.3% a year ago. Don’t be too hard on your kid if he tells you he can’t find a job -- he probably isn’t lying.

While for the most part the earnings from teen jobs tend to go towards clothes from Abercrombie & Fitch (ANF) and other teen clothing stores, for many it is a significant part of paying for college. Also, when teens work, they learn important job skills, such as the importance of actually showing up, and doing so on time. The extremely low levels of teens working is not a good sign for the future.

In the Great Depression, we had the Civilian Conservation Corps (CCC) that put unemployed kids and young adults back to work. Perhaps it would be a good idea to do so in the current Lesser Depression. That, however, would entail the federal government actually spending some money to help fix the problem.

Ideology would trump effectiveness at creating jobs for teens. If the total cost were $10 per hour (minimum wage plus overhead costs) it would cost $10.4 billion to put 1 million teens to work part time (20 hours per week) for a year. In addition to the value of whatever work they did (cleaning parks, tutoring younger kids, helping take care of seniors, etc.) it would also teach them very important long-term job skills, and would be a very good investment in the future.

The graph below tracks the overall unemployment rate for men and women, as well as the unemployment rates for teens of each gender.

By Racial Type

Not surprisingly, Whites have a lower unemployment rates that do Blacks or Hispanics. The White unemployment rate was unchanged at 8.0% for the month and is is down from 8.7% a year ago. The participation rate was unchanged at 64.5% for the month, but down from 65.1% a year ago. The employment rate for Whites was also unchanged on the month, at 59.3% but is down from the year ago level of 59.5%.

Thus it is a fair conclusion that the jobs picture for Whites was unchanged for the month, but the year over year improvement is partly an illusion. The fall in the participation rate, greatly exaggerated the real improvement in the employment picture.

The unemployment rate for Blacks dropped to 16.0% from 16.7% last month, and it is below the 16.1% a year-ago level. The true picture though is actually better than that, at least as with regard to direction. The level is horrible.

For the month, the participation rate for Blacks rose to 62.0% from 61.5% last month and up from 61.7% a year ago. The monthly improvement is even better than it looks based on the unemployment rate alone, especially for the month-to-month numbers, but to a lesser extent the year-over-year improvement as well. The employment rate for Blacks rose to 52.1% from 51.2% in August, and is up from 51.8% a year ago.

The unemployment rate is 100% higher than that for Whites, and the employment rate is 12.1% lower (52.1% vs. 59.3%). The participation rate is just 3.9% lower. A year ago, the participation rate was 5.2% lower and the employment rate was 12.9% lower. A year ago, the unemployment rate for Blacks was 85.1% higher than the White unemployment rate.

The unemployment rate for African American teens looks more like the unemployment rates you associate with Africa, but has improved significantly over the last year. It fell to 44.2% from 46.5% in July, and down from 49.2% a year ago. That is in the face of a rise in the participation rate this month to 25.8% from 24.2% in August, and up from just 23.1% a year ago.

In September, just 14.4% of Black teens had a job, but that is up from 13.0% in August and only 11.7% a year ago. While the improvement is encouraging, the levels are still beyond awful.

For Hispanics, the unemployment rate was unchanged for the month at 11.3% and down from 12.5% last year. The true picture is slightly better than that on a month-to-month basis, but relative to a year ago, it is much more downbeat than the big drop in the unemployment rate would suggest. The participation rate rose to 66.4% from 66.3% last month but down from 67.5% a year ago.

The employment rate rose to 58.9% from 58.8% last month. A year ago the Hispanic employment rate was 59.1%. Thus, the improvement in the job picture from last year one would see if you only looked at the unemployment rate, is a mirage. On the other hand, there was actually a month-to-month improvement, rather than no change.

The participation rate by Hispanics is actually 2.9% higher than for Whites, but a year ago it was 3.3% higher than for Whites. The employment rate is 0.6% lower, while a year ago it was 0.7% lower than for Whites. Over the last year the unemployment rate has moved from being 43.7% higher than the White unemployment rate to 41.3% today.

The graph below shows the unemployment rates for the three biggest racial groups over the last 30 years. Note that while the unemployment rate for Blacks is always higher than that for Hispanics, which is in turn higher than for that of Whites, that the more disadvantaged groups tend to be hit harder when the economy turns down than are Whites.

The numbers in the graph are not seasonally adjusted, while the rest of the numbers I have been discussing are seasonally adjusted. The FRED database did not have all the numbers on a seasonally adjusted basis.