How Unemployment Breaks Down

Unemployment his some groups harder than others

The monthly jobs report was much better than expected. I will not go over the basic headline numbers, but if you want to see them go here. The picture is still pretty ugly, though, even if not quite as bad as had been feared, as shown in the graph below (from http://www.calculatedriskblog.com/).

There is a lot of important data in the report that is generally not widely discussed. First is the disparate impact that this recession has had by gender. Men have been absolutely slammed by it, with the adult male unemployment rate now at 9.8%, up from 9.4% last month. The unemployment rate for women also increased by 0.4%, but only reached 7.5%. A year ago, the unemployment rates were almost the same between the sexes, at 4.8% for Women and 5.0% for Men.

Adult men are still more likely to be employed than adult women -- there are still far more stay at home Moms than stay at home Dads. However, the percentage of adult men with a job is down to 68.0% from 71.9% a year ago, a drop of 3.9%. The percentage of adult women with a job (a paying one out of the home, that is) is now 56.5% vs. 58.1%, a drop of only 1.6%. To some extent the difference in the absolute employment rate is affected by the greater life expectancy of women as well, but the year-over-year change is not affected by this.

The recession has also been tough on teens of both sexes, with their unemployment rate rising to 22.7% in May from 21.5% in April and 18.9% a year ago. Just 29.8% of teens are working vs. 34.4% a year ago. While teen jobs are not as important in terms of families being able to pay the mortgage, they are important in giving young people exposure to the labor market. The high teen unemployment rate is also not good news for retailers like Abercrombie & Fitch (ANF - Analyst Report) and American Eagle (AEO - Snapshot Report), which cater to teens.

Minorities have also been hit hard, although there was some improvement for African Americans this month as the unemployment rate ticked down to 14.9% from 15.0% in April, but it is up from 9.7% a year ago. Hispanics were hard hit this month with the unemployment rate jumping to 12.7% from 11.3% last month and 7.0% a year ago. Keep in mind these are the "official" unemployment numbers (U-3) for the groups.

If one includes discouraged workers and people working part time since they can’t find full-time work, the situation is much bleaker. Nationwide, the unemployment rate measured that way (U-6) is 16.4%, not the 9.4% U-3 rate, and it rose even more, jumping from 15.8% in April and 9.8% a year ago. Unfortunately the U-6 numbers are not broken down by ethnic, gender or age.

Part of the hit to men rather than women has to do with the industries that are losing the most jobs. This month, Manufacturing jobs fell by 156,000 and Construction jobs fell by 59,000. Over the last year, employment in Construction has dropped by almost a million jobs, representing 13.6% of those from a year ago.

Keep in mind that the decline in Construction jobs has been going on much longer than for the rest of the economy. They peaked out in December 2006 at 7.737 million, and are now down to 6.303 million. Similarly, Manufacturing has been very hard hit, losing 156,000 jobs in the month and a drop of 1.57 million over the last year. Factory jobs have been in a long-term secular decline in the country, so it is hard to even figure out when to point to as a top for this cycle.

In contrast, Education and Health Services has consistently added jobs through this downturn, adding 44,000 this month alone and 417 over the last year. There is a far higher percentage of women teachers and nurses (and doctors, for that matter) than there is of women construction and factory workers.

In addition to the unemployment rate, it is also important to keep track of the employment rate, or the percentage of all people who have jobs. That fell to 59.7% in May, down from 59.9% in April and 62.5% a year ago.

This is the lowest percentage of Americans holding a job since October 1984. One way or another, people with jobs support most of those (aside from the idle rich) who don’t have a job, and it is easier to do if more people have jobs.