A little over a week ago the title to one of my articles was “Employment Numbers Are About To Get Historically Bad”. The article was looking ahead to last Friday’s employment report, which had it followed expectations would have shown another 600,000 jobs lost in April. Fortunately for us, the report wasn’t as bad as expected. However, the job losses are still significant and still approaching historical levels.

Before I get to the historical aspects of the job losses, there’s something else to consider when looking at the job losses: where the losses are occurring.

The losses aren’t simply blue-collar workers. They are also white-collar. And the hard part for many of the individuals who have lost their jobs recently is that their jobs may never come back. So it isn’t a matter of waiting around until a new job opens up when the economy turns around. The jobs will simply never be there again. For example, last month the economy lost approximately 149,000 jobs in the manufacturing sector. Many of the plants that closed will never open again. The same goes for some of the 110,000 construction jobs that were lost last month. Even white-collar employees are facing grim prospects. Last month, professional and business services lost 122,000 jobs. Whether the company went out of business, consolidated with another one, or simply trimmed ranks, these jobs are gone for a long time, perhaps forever.

Adding to the problem, many of these workers are not easily transitioned to ‘burgeoning’ job fields. For example, an autoworker who has worked for years in plants can’t simply transition over to the healthcare sector to find employment. They need time to take classes, learn, and become proficient in their new fields. Never mind older workers who have no desire to switch jobs at such a late stage in their careers.

So how historically bad have the job losses been? It depends on the comparison.

In terms of the shear number of jobs lost, the last 16 months have been staggering. We have doubled the previous number of jobs lost in consecutive months.

However, there are simply more workers today than ever before, so for an ‘apples to apples’ comparison, let’s look at the number of jobs lost in relation to workers. To do this, I pulled up the historical data, and looked at the number of workers the month before the losses started. For example, the number of non-farm workers in November 2007 was just over 139 million. The number of jobs lost so far is 5.73 million, so the economy has shed nearly 4.13% of the workforce during the last 16 months. As you can see, we are nearly identical to the percentage of jobs lost during the 1957-1958 time period. We would only need to lose 30,500 jobs in May to eclipse the 1957-1958 period, and become the worst percentage loss ever. Unfortunately, it would take a miracle for that not to happen.

So how do the huge monthly losses we have seen stack up? Surprisingly, not too bad. To determine this number, I took the number of jobs lost and compared that to the previous months payroll figures. For example, in April, the economy lost 539,000 jobs out of the roughly 132 million jobs that were on the payrolls in March. That’s 0.55% of the jobs that were available the month before. Historically, despite the huge numbers of jobs lost recently, only January ranks in the top 10 in terms of overall percentages.

Hopefully this gives you a good frame of reference to compare the mounting job losses we are seeing right now. In terms of shear numbers and percentages we are looking at the worst or almost the worst period in history. There have been much worse monthly losses, but not extended periods.

Another record we will set very soon is the number of consecutive months of jobs lost. We currently stand at 16 months, one shy of the record. It will take divine intervention to not set the record in June.

Respectfully,

Christian Hill