The Shrinking Work Force.

We've looked at the new economy before, especially as it relates to jobs.  24/7 Wall Street had an interesting take on this today which I thought I'd excerpt.  I'm going to have more to say on this at a later date because I believe that we are going to see for many years very high unemployment.  There is no one reason for this.  One of the main reasons however is that the world is changing.  Below is the excerpted article.  Highlights mine.  Link to follow.

"The Great Recession has taken its toll on America. The New-Normal in U.S. economic data and jobs is starting to look like more like Europe every day, except that none of us get five-weeks off or have guarantees of real retirement income or anything resembling assured healthcare even after the new legislation passes this year.   {Last} friday’s jobs data with a 10% unemployment rate and a non-Farm Payrolls figure coming in at -85,000 rather than flat or even a slight gain omits the worst part of the fallacy of real economic recovery down at the worker-on-the-street level.

Sure, things are getting better or at least getting less and less bad, on almost all fronts. The numbers say so and it is impossible to deny that we are now in a much different situation than we were in just ten to fourteen months ago. But there is a real undercurrent that is hard to ignore, and that is that the workforce is shrinking at a rate that you have to scratch your head over how strong the recovery is.

I will be the first one to admit that using year-end jobs data, particularly on a preliminary unrevised basis, always feels more like a guess than an exact science. How many people wouldn’t get out to get the government subsidy or go out to interview for jobs in the last two or three weeks of any given year is anyone’s guess. How many people got snowed in is a guess as well, yet it happens. Companies put off hiring decisions until mid-January at too many places to count. There are also many people who work “off the books” during the holiday season as well. But the headline figures are so far off on the contraction versus reality that grasping the real situation may be different from just the Labor Department’s headline data.

The unofficial unemployment rate is reported by most as being above 17%, meaning the officially unemployed plus those working odd-jobs, short-term contracts, or the under-employed. These workers have very little disposable income. And even fewer of the underemployed have the basics like health insurance, IRA and 401/K contributions, vacation days, pay for sick days, severance rights, and significant unemployment benefits.

......Bloomberg noted, “Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent…. About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed.”....This feels like Uncle Sam is selling and Joe Public is buying into the notion that these other figures (people) are no more than what technology companies would call ‘pro forma’ or non-GAAP in their financial reporting......There is no way that these people all decided to just become housewives and house-husbands, nor is there a way that most of their household members want them to have that job title.

.......It is arguable about how many new jobs have to be created per month just to get the unemployment back to 7% or 8% by 2012, but almost all agree that it has to be hundreds of thousands. How many “green jobs” can ultimately fill this gap? How many new branch bank locations are being created? How many education and healthcare positions can keep filling the gap? Americans who cannot find work are going to have one of three new job descriptions by 2011… The accidental entrepreneur, the accidental house-spouse, or the independent street technician.......

......Economic models run by economists have stated over and over that unemployment is a very lagging indicator. Arguably it is a sagging indicator. The New Normal is becoming “The Normal of Less and Less.” It was just in November that it seemed as though there was an outside shot that unemployment might register back in the single digits at the end of year data. That may be farther out now, but ultimately that will occur. If they keep counting a smaller and smaller workforce, then the unemployment rate can magically go as low as those creating the figures want them to read.......Every single month we keep hoping that the jobs data will be the last bad month. And we keep having to buy into a jobless recovery as the new normal....

Link:  http://247wallst.com/2010/01/09/out-for-smokes-or-alien-abductions-the-shrinkring-labor-force/#more-57409