We get some of our US unemployment numbers today and the two we did get, initial unemployment claims and continuing unemployment claims, look really rather good. Initial claims, those registering for state unemployment insurance benefits for the first time last week were down to 232,000. Either fewer people are losing their jobs or people who do lose them are gaining new ones before they even have a chance to register as unemployed. Similarly, that fewer people are staying unemployed, the continuing claims is down to 1.9 million is also good.
Fewer people becoming unemployed, fewer people staying unemployed, what's wrong with this? Nothing very much, it should be said, but we should also point out that those aren't the only numbers we might be concerned about. And when we look at all of our numbers we can indeed find something else to worry about. Because what we're finding is that our unemployment problem is off among people not actually claiming unemployment insurance.
This is good news, obviously:
WASHINGTON (AP) — Fewer people sought U.S. unemployment benefits last week, a sign Americans are benefiting from solid job security.
THE NUMBERS: Applications for weekly unemployment aid fell 4,000 to 232,000, the Labor Department said Thursday. That's the lowest level in nearly three months. The four-week average, a less volatile figure, declined 2,750 to 240,750.
This is also just great:
New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labor market slack.
And so is this:
The number Americans on unemployment fell mid-May to the lowest level since 1988, underscoring the strongest labor market in years.
So-called continuing claims, or the number of people collecting jobless benefits, fell by 22,000 to 1.9 million in early May, the government said Thursday. That’s the lowest level in 29 years.
However, all is not entirely rosy in this garden. Because a part of this is that the unemployment we do have is moving off into things not being counted here.
Here's the chart of those continuing claims:
Near to an historical low for the number of people claiming unemployment insurance. And when we look at the change in the size of the labour force, an even lower rate:
The same number of people in a larger population, that must be a lower rate. Nothing wrong with that. However, here's the start of our problems, the unemployment rate:
Err, waita minute! We said that our claiming unemployment rate must be below historical norms because, but, but, now we're saying that the unemployment rate isn't. What gives?
That we're using two different definitions of unemployment here. This last, here, is the people who would like to have a job, have been (at least reasonably seriously) looking for a job and haven't found one. The headlines numbers today are the number of people getting unemployment insurance benefits. Different definitions and thus different numbers. Which leads to our fourth chart:
The US unemployment problem has become a little bit more European. Historically the short term unemployment rates on both sides of the Atlantic have been about the same given the stage of the business cycle, higher in recessions, lower in booms. US long term unemployment really hasn't been much of a thing. Europe's long higher total unemployment rates have been about long term unemployment. As my old professor, Richard Layard, keeps saying, this is at least partly because unemployment benefits in Europe tend to be permanent and last only 26 weeks in the US. Which is, of course, why jobless claims can be at historical lows even if the unemployment rate isn't.
And that's where our problem is. It being twofold. The first is that we know that it's very much more difficult to get the long term unemployed back into the labour force. The European experience is that after 12 months out, certainly after 24, it's near impossible that a middle aged person will return to it. That's happening a little in the US now. That remnant piece of the unemployment caused by the recession is going to be terribly hard to shift.
Which brings us to the other problem of course. In the American system there really isn't much in the way of support for those who have exhausted their unemployment insurance benefits. During the recession benefits were extended out to 99 weeks on this basis, they're back to 26 just about everywhere. So we've a group of people not working, we know that getting this group back into employment is somewhere between very difficult and impossible and what should we be doing about it?
No, I don't have an answer either but it is the question we should be thinking about. Now that US unemployment is a bit more European, a bit more entrenched among the long term unemployed, what are we going to do about it?
