"Part-Time Workers Mask Unemployment Woes"

Reads the headline in the NY Times.  We all know the labor market has done a serious nose-dive in the past year, but its actually worse than the primary government statistics on unemployment indicate. 

That's because the "official" rate that's published doesn't include "discouraged" workers who have dropped out of the labor force (stopped looking for work), and especially the "under-employed," such as persons working part-time instead of full-time, or working in full-time jobs they wouldn't even consider in better times.

June's "official" unemployment rate of 9.5% pales in comparison to the the U.S. Department of Labor's broadest measure (which include the part-time workers described above). For instance, in Michigan, California and Rhode Island, and Oregon, the rate exceeds 20%, or one in five workers in these states (and several other states aren't too far behind this 20% mark).

Most of the hardest hit states are more reliant on manufacturing, housing construction and other infrastructure-related industries.

Since the labor market tends to be a lagging indicator, which often continues to worsen even after the economy officially bottoms, nearly all economists agree that we won't see any significant improvements this year, even if the economy bounces off the bottom in the second half of 2009, as many are predicting today.

Please checkout the article if you're one of those twisted soles (like me!) who enjoys economics. There's a lot of good information in it.

An article in today's Wall Street Journal points out just how weak the labor market picture is, based on the most recent batch of monthly state reports.  Not more than two week's ago (see earlier post) it was predicted that in the third quarter, the employment outlook would be stable, according to the Manpower Employment Outlook Survey (MEOS).  It that's true, than the most recent set of employment reports must be the storm before the calm.

Here's a few examples of how bad things have gotten recently:

• May 2009 state employment reports showed only two states did not report increased unemployment rates (congrats to Nebraska and Vermont!) for the month.
• Eight states reported all-time record unemployment rates (since accurate records have been kept - the 30s would certainly have been worse, but that's not much solace today). Here's a quick sampling of a few of the records: 14.1% in Michigan, Oregon at 12.4%, and California at 11.5%.
• Payrolls were lower in 48 states, compared to the year before.  The largest decline was a 7.4% drop in Arizona, which has been devastated by a crushing real-estate led recession.

Suddenly, the MEOS-predicted 3rd quarter stability is looking pretty shaky, especially since the labor market tends to lag overall economic trends.  Many economists are predicting further labor market weakness in the second half of this year, even if the economy levels out and starts to recover, which many expect will happen sometime in the 3rd or 4th quarter of this year.  Let's hope they are right, at least about the recovery part.