It seems that the parade of statistics related to unemployment just keeps marching on by. Facts and figures are tossed around by the media on nearly an hourly basis, and as long as the winds of the economy remain turbulent, we can expect the flurry of labor-related data to continue.
With an unremarkable gain of only 67,000 private sector jobs in August, a figure that was 32% below the average private sector growth from January to July (source: Bureau of Labor Statistics) clearly the unemployment crisis is far from over. But no matter what the level of employment may be in any given month, one thing remains constant. If your skill set is accounting or finance related, you are expected to have a firm grasp on what all the data about unemployment really means.
With that in mind, here are three key things financial professionals should know about unemployment in the current economy:
The Difference Between “Unemployment” and “Underemployment”
Most of what we hear in the news related to labor conditions is centered around unemployment. But the more compelling concept is underemployment, which takes into account not only those people who are officially unemployed, but also those who have either settled for part-time work or given up searching for a job altogether. Unemployment figures are therefore somewhat misleading, because by ignoring people who have stopped long-time job searches or taken the desperate measure of accepting a part-time job, a false sense of security about the job market can easily be created. Hearing that current “unemployment” is at 9.6% doesn’t sound as bad as the more revealing figure of 16.7% that are either “unemployed” or “underemployed.” The 7.1% difference says a lot about the true nature of the job market in America today.
The Census Effect
Much has been written about the effect of US census jobs drying up once the 2010 Census Bureau initiatives are complete. Although most people are aware that the jobs created by the census were temporary, the impact of employees moving in and out of the workforce needs to be understood. Over 110,000 census jobs were cut in the month of August, which was a big factor in the overall loss of 54,000 payroll jobs (source: Bureau of Labor Statistics). Losing that many jobs is not a good thing in any month, but taken within the context of the census and its temporary workers, the number is not quite as bad as it seems on the surface.
The Size of the Labor Force
This is another veiled facet of unemployment conditions, because the size of the work force in relationship to total population is not accounted for in reporting of the unemployment rate. While the size of the labor force itself is reported on a monthly basis (it grew by 550,000 in August) the analysis of what the numbers mean is often missing. Because of growth in the number of working-age Americans, the total workforce should have experienced an expansion of 3.7 million workers from December of 2007 to August of 2010. The actual number was just over 240,000, which represents a staggering shortfall of nearly 94% (Source: Economic Policy Institute) That’s a figure that should be getting more attention than the reported unemployment rate of 9.6%.
Fortunately for financial professionals, the job outlook is better than that for most occupations (BLS Occupational Outlook Handbook, 2010-2011 Edition). That means less worry for finance sector job seekers, but nevertheless, a clear understanding of key unemployment terms remains essential.
Without it, your credibility could become the next casualty in an already shaky economic environment.
By: David DiCola
David DiCola is a 20-year management veteran and the author of Customer Golf – The Short Game, a novel about overcoming obstacles in business and in golf.
With an unremarkable gain of only 67,000 private sector jobs in August, a figure that was 32% below the average private sector growth from January to July (source: Bureau of Labor Statistics) clearly the unemployment crisis is far from over. But no matter what the level of employment may be in any given month, one thing remains constant. If your skill set is accounting or finance related, you are expected to have a firm grasp on what all the data about unemployment really means.
With that in mind, here are three key things financial professionals should know about unemployment in the current economy:
The Difference Between “Unemployment” and “Underemployment”
Most of what we hear in the news related to labor conditions is centered around unemployment. But the more compelling concept is underemployment, which takes into account not only those people who are officially unemployed, but also those who have either settled for part-time work or given up searching for a job altogether. Unemployment figures are therefore somewhat misleading, because by ignoring people who have stopped long-time job searches or taken the desperate measure of accepting a part-time job, a false sense of security about the job market can easily be created. Hearing that current “unemployment” is at 9.6% doesn’t sound as bad as the more revealing figure of 16.7% that are either “unemployed” or “underemployed.” The 7.1% difference says a lot about the true nature of the job market in America today.
The Census Effect
Much has been written about the effect of US census jobs drying up once the 2010 Census Bureau initiatives are complete. Although most people are aware that the jobs created by the census were temporary, the impact of employees moving in and out of the workforce needs to be understood. Over 110,000 census jobs were cut in the month of August, which was a big factor in the overall loss of 54,000 payroll jobs (source: Bureau of Labor Statistics). Losing that many jobs is not a good thing in any month, but taken within the context of the census and its temporary workers, the number is not quite as bad as it seems on the surface.
The Size of the Labor Force
This is another veiled facet of unemployment conditions, because the size of the work force in relationship to total population is not accounted for in reporting of the unemployment rate. While the size of the labor force itself is reported on a monthly basis (it grew by 550,000 in August) the analysis of what the numbers mean is often missing. Because of growth in the number of working-age Americans, the total workforce should have experienced an expansion of 3.7 million workers from December of 2007 to August of 2010. The actual number was just over 240,000, which represents a staggering shortfall of nearly 94% (Source: Economic Policy Institute) That’s a figure that should be getting more attention than the reported unemployment rate of 9.6%.
Fortunately for financial professionals, the job outlook is better than that for most occupations (BLS Occupational Outlook Handbook, 2010-2011 Edition). That means less worry for finance sector job seekers, but nevertheless, a clear understanding of key unemployment terms remains essential.
Without it, your credibility could become the next casualty in an already shaky economic environment.
By: David DiCola
David DiCola is a 20-year management veteran and the author of Customer Golf – The Short Game, a novel about overcoming obstacles in business and in golf.
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