Veteran Employment Situation Report
Friday, November 4, 2016
Welcome to the November 2016 VetJobs Veteran Employment Situation Report (VESR) covering veteran unemployment for the time period of OCTOBER 2016. The VESR is published when the Department of Labor (DOL) releases the unemployment reports which is generally the first Friday of the month.
This report is in four parts.
1. The first section will be an editorial providing a brief overview of the economy.
2. The second section covers specifically the employment situation of veterans.
3. The third section covers current labor metrics and the Department of Labor’s (DOL) Bureau of Labor Statistics (BLS) report on the labor market.
4. The fourth section covers where the new jobs were created and where one would currently have the best chance for finding employment.
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1. EDITORIAL OVERVIEW
The unemployment numbers were released this morning by the Department of Labor (DOL) and the Bureau of Labor Statistics (BLS), and it is a very anemic report going into the presidential election. The national unemployment rate fell from 5.0% to 4.9% based on 200,000 jobs being eliminated. The labor force participation rate fell to 62.8%. As I have commented in the past, you cannot have a vibrant economy with 38% of your available workforce not working. But it does explain why more people are on welfare in America than ever.
The good news is the national veteran unemployment rate held constant at 4.3%, six-tenths of a point lower than the national unemployment rate. Veterans are in demand by civilian employers as demonstrated that the national veteran unemployment rate is always lower than the national civilian unemployment rate.
Disturbingly, the majority of jobs created in October were NOT full time jobs, but part-time jobs. Of the new jobs created, 90,000 were part-time. Only 103,000 were full-time. Employers are still not willing to commit to full time jobs as America continues to recover from the Great Recession of 2007. There are a host of reasons for them staying with part-time employees.
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We are in the final days of a bruising presidential political campaign and it sometimes seems hard to discern the truth from political hucksterism. One of the claims made by candidates that intrigues me deals with jobs being lost to overseas markets. While some jobs are going overseas, it is not quite what it would seem. It turns out that more of our jobs are being lost to robotics than are going to China!
The Christian Science Monitor(CSM) had a recent article stating that most lost U.S. jobs, 88%, were taken by robots and other homegrown factors that reduce factories’ need for human labor. The National Association of Manufacturers still points out that there are over 200,000 vacant manufacturing jobs available and unfilled, but America does not have enough qualified candidates to fill the jobs. A study at Ball State University’s Center for Business and Economic Research last year found that trade accounted for just 13% of America’s lost factory jobs.
CSM reports that manufacturing is still flourishing in America. Problem is, factories don’t need as many people as they used to because machines now do so much of the work. The CSM stated America has lost more than 7 million factory jobs since manufacturing employment peaked in 1979. Yet American factory production, minus raw materials and some other costs, more than doubled over the same span to $1.91 trillion last year. That’s a notch below the record set on the eve of the Great Recession in 2007. And it makes U.S. manufacturers No. 2 in the world behind China.
For example, General Motors now employs barely one third of the 600,000 workers it had in the 1970s. Yet it churns out more cars and trucks than ever. Another example is the production of steel and other primary metals. Since 1997, the United States has lost 265,000 jobs in the production of primary metals, a 42% decline at a time when such production in the U.S. has surged 38%.
The robot revolution is just beginning and will have profound impact on the American economy. The Boston Consulting Group predicts that investment in industrial robots will grow 10% a year in the 25-biggest export nations through 2025, up from 2.0% or 3.0% growth in recent years. The economics of robotics are hard to dispute. When products are replaced or updated, robots can be reprogrammed far faster and more easily than people can be retrained.
Now robotics and automation is spreading into the restaurant industry. Wendy’s announced that it is going to begin installing automated self-service kiosks this year. Per Fox News in Chicago, this is “because of growing labor costs associated [with] rising minimum wages. California and New York are both raising minimum wages to $15 per hour over the next several years.” Wendy’s is hardly the first fast food company to present looming automatization as a response to new minimum wage laws. White Castle, Carl’s Jr and McDonalds are looking to do the same. Soon, when you go to a restaurant, you will order at a kiosk, pay with a credit card, take a seat and a robot will deliver your food. A robot will prepare and cook your food. And a robot will clean up after you leave. That is a lot of human jobs being permanently eliminated.
These used to be entry level jobs for high school students, college students and unskilled youth. And these jobs are going to be disappearing rapidly. What will they do for entry level jobs? The unions and agitators protesting for a $15 minimum wage will get the $15, but there will only be a fraction of the jobs left being filled by a living human being. Sometimes you must be careful what you demand. There is a law of unintended consequences.
What does this mean if you are a person looking for a new job? Things are changing and very fast. 70% to 80% of the jobs we recognize today will disappear in the next 10 years. There will be a lot of new jobs created, but there will not be enough new jobs to absorb our growing population. And the new jobs will require more advanced technical skills that probably are not even imagined today. Our educational system is not prepared to train candidates for the entry level jobs of today, much less the entry level jobs of tomorrow.
Coming back to today’s economy, economic growth in the United States got a jolt of momentum in the third quarter thanks to a rebound in private-inventory investment and export acceleration, which offset a decline in consumer spending. Per the Commerce Department, the gross domestic product (GDP), a broad measure of goods and services produced across the U.S. economy, grew at an annualized pace of 2.9% during the third quarter, topping expectations for a 2.5% rate. The third-quarter pace was the fastest in two years, and up from an annualized rate of 1.4% notched in the prior quarter.
Private inventories, which have been a drag on GDP for the last five quarters, rebounded over the three-month period as they rose by $12.6 billion, or 0.61%. Meanwhile, exports surged at an annualized rate of 10%.
It’s not just businesses feeling more confident, consumers were also a factor that helped drive economic expansion in the third quarter, though they contributed less to growth than in the previous three-month period. Consumer spending grew at a rate of 2.1% in 3Q, down from the 4.3% rate in the prior quarter.
On a final note, the restaurant industry saw a 2.8% decline in business this past fiscal year, and turned in its weakest performance since 2009. Economic analyst Paul Westra sees the downturn as a looming “restaurant recession.” The Wall Street Journal reports that “in the last 10 months, eight major restaurant companies … have filed for bankruptcy.”
What is to blame for the decline? Historically, the culprit was an increase in the price of gasoline leading to increased food prices. However, gas prices have declined significantly for over a year. An April survey conducted by the National Restaurant Association found that nearly 45% of Americans are eating out less than they prefer. Instead, it appears that the number one reason for the decline in restaurant business is ObamaCare. Per a Civic Science survey of Americans, of those who ate fast food regularly, there was a cutback of 47% due to rising health insurance costs. In other words, Americans are beginning to feel ObamaCare’s pinch on their pocketbooks. ObamaCare premiums are increasing 25% nationally, and in some states like Arizona premiums are going up over 100%. That is assuming a health care provider is still offering policies in your state. The majority of the healthcare exchanges are closing and states are being reduced to only one provider with very, very high premiums.
Minnesota Democrat Governor Mark Dayton recently stated, “The Affordable Care Act is no longer affordable to increasing numbers of people.” Bill Clinton called it “the craziest thing in the world” where Americans “wind up with their premiums doubled and their coverage cut in half.” The truth is, it never was affordable. Unfortunately for the nation, the ObamaCare-created “restaurant recession” is the proverbial “canary in the coal mine” for the rest of U.S. economy. Many economists now fear another recession on the horizon as ObamaCare’s impact is felt across the broader economy.
For those seeking work or newly entering the workforce, all the rules are changing. The question now becomes will our business leaders and politicians be able to create enough jobs to keep our population gainfully employed and paying taxes. The next four years will be a challenge for whoever wins the presidency.
Thank you for reading.
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2. VETERAN UNEMPLOYMENT REPORT
General Summary from CPS Veterans Report
The BLS CPS report states there were 20,808,000 veterans left in the United States in October, down 24,000 from the 20,832,000 veterans in September.
As I have said many times, since the Vietnam War the trend of veterans in the United States has continuously been decreasing. America has lost over two-thirds of its veterans since the Vietnam War. This is an important issue for veterans as with decreasing numbers, they are losing the political power they had in the past. This is not lost on politicians running for office and may be one of the contributing factors that would help explain problems at the Veterans Administration.
BLS CPS reports there were 10,678,000 (51.3%) veterans in the workforce in October. That represents an increase of 56,000 from the 10,622,000 (50.1%) veterans in the workforce in September.
460,000 (4.3%) veterans were unemployed in October, down 1,000 from the 461,000 (4.3%) veterans who were unemployed in September. 10,130,000 veterans were not in the workforce in October, a decrease of 50,000 from the 10,180,000 who were not in the workforce in September. This number shows there are a lot of veterans sitting on the sidelines and not participating in the workforce. This is also true of civilians where over 90 million are not participating in the workforce. Again, in spite of what politicians may say, you cannot have a thriving economy with so many people not participating in the workforce.
The really good news continues to be that the overall veteran unemployment rate is still lower than the national unemployment rate. The fact that the veteran unemployment rate of 4.3% is lower than the national unemployment rate of 4.9% is great news for the veteran community. And again demonstrates that veterans are in high demand in the civilian work place. The October 4.3% veteran unemployment rate again confirms that veterans are obtaining employment at a better rate than nonveterans.
In October there were 243,000 veterans in the 18 to 24 year old age group, up from the 215,000 veterans in September. Of those, 176,000 (72.4%) were in the civilian labor force, of which 152,000 (62.6%) were employed and 24,000 (13.5%) were unemployed. This is nearly a doubling of unemployed veterans in this cohort! For comparison, the national 18 to 24-year old unemployment rate in October was 9.2% (1,726,000).
There were 1,722,000 veterans in the 25 to 34-year old veteran cohort in October, down 27,000 from September. Of this group, 1,444,000 (83.8%) were in the workforce of which 1,363,000 (79.1%) were employed and 81,000 (5.6%) were unemployed. 278,000 were not in the workforce. For comparison, the national unemployment rate for the 25 to 34 year olds in October was 5.0% (1,788,000)
The unemployment rates for the older veteran cohorts are as follows:
October September August
35 to 44 year olds 3.4% (68,000) 2.7% (54,000) 4.2% (83,000)
45 to 54 year olds 3.6% (99,000) 4.3% (120,0000 4.0% (113,000)
55 to 64 year olds 4.2% (57,000) 4.7% (114,000) 3.6% (83,000)
65 year olds and over 4.9% (92,000) 4.5% (85,000) 3.7% (71,000)
The above numbers indicate that older veterans in October and for the last three months found jobs at a better rate than non-veterans given that the national unemployment rate was 5.0% and now 4.9% for October. Most economists view unemployment rates of below 4.5% to 5.0% as just the normal churn of people moving between jobs. Some refer to it as natural unemployment. No matter what one calls it, the overall numbers for veteran unemployment are very strong when compared to their civilian counterparts.
There were 2,019,000 women veterans in October. 1,316,000 (65.2%) were in the civilian labor force of which 1,242,000 (61.5%) were employed, and 74,000 (5.6%) were unemployed. 703,000 women veterans were not in the workforce in October. The national unemployment rate for women in October was 4.4% (3,239,000).
Gulf War II Veterans
There were 3,932,000 Gulf War II era veterans in October. 3,258,000 (82.9%) were in the workforce. Of those, 3,105,000 (79.0%) were employed and 153,000 (4.7%) were unemployed. 674,000 Gulf War II era veterans were not in the labor force.
There were 2,593,000 black veterans in October, of which 1,567,000 (60.4%) were in the civilian work force. 1,469,000 (56.6%) were employed and 99,000 (6.3%) were unemployed. The national Black unemployment rate in October was 8.1% (1,610,000).
As in the past, the national Black unemployment rate is higher than the Black veteran unemployment rate. These numbers confirm the advantages of minorities joining the military to obtain employment skills and work experience. From these numbers, the Black veterans are definitely finding jobs at a better rate than their Black civilian counterparts!
There were 297,000 Asian veterans in October of which 197,000 (66.5%) were in the workforce. 197,000 (66.5%) were employed and the number of unemployed was not statistically reportable. This is a statistical anomaly, but it does occasionally occur. Basically, the Asian veteran unemployment rate is near zero percent. 99,000 were not in the labor force. The national Asian unemployment rate in October was 3.2% (302,000).
There were 1,460,000 Hispanic veterans in October of which 921,000 (63.1%) were in the workforce. 893,000 (61.2%) were employed and 28,000 (3.2%) were unemployed. The veteran Hispanic unemployment rate fell 50% in October! 538,000 were not in the workforce. The national unemployment rate for Hispanics in October was 5.2% (1,385,000).
There were 17,310,000 White veterans in October of which 8,535,000 (49.3%) were in the workforce. 8,195,000 (47.3%) were employed and 340,000 (4.0%) were unemployed. 8,775,000 White veterans were not in the workforce. The national White unemployment rate in October 3.9% (4,837,000).
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3. From the BLS
Erica L. Groshen, Commissioner of the Bureau of Labor Statistics reported this morning that Nonfarm payroll employment increased by 161,000 in October, and the unemployment rate was little changed at 4.9%. Economists had expected 175,000 new jobs. The reality is the economy needs to be creating 250,000 new jobs. This is part of the reason why America has more people on welfare than ever before.
Employment continued to trend up in health care, professional and business services, and financial activities. Thus far this year, nonfarm job growth has averaged 181,000 per month, compared with an average gain of 229,000 per month in 2015. Incorporating revisions for August and September, which increased nonfarm payroll employment by 44,000, monthly job gains have averaged 176,000 over the past 3 months. These are anemic numbers.
Average hourly earnings of all employees on private nonfarm payrolls grew by 10 cents in October to $25.92, following an 8-cent increase in September. Over the past 12 months, average hourly earnings have risen by 2.8%. From September 2015 to September 2016, the Consumer Price Index for All Urban
Consumers (CPI-U) increased by 1.5% (on a seasonally adjusted basis).
Turning to data from the survey of households, both the unemployment rate, at 4.9%, and the number of unemployed people, at 7.8 million, changed little over the month and have shown little net movement since August 2015. Among the unemployed in October, 2.0 million, or 25.2%, had been searching for work for 27 weeks or more.
The labor force participation rate, at 62.8%, and the employment-population ratio, at 59.7%, changed little over the month. These measures have shown little movement in recent months, although both are up over the year.
Among people employed in October, the number working part time for economic reasons, also referred to as involuntary part-time workers, was 5.9 million. This measure has shown little net change over the past year.
Among people who were neither working nor looking for work, 1.7 million were marginally attached to the labor force in October, down from 1.9 million a year earlier. Discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, numbered 487,000 in October, also down from a year earlier. (Marginally attached to the labor force refers to people who had not looked for work in the 4 weeks prior to the survey but wanted a job, were available to work, and had looked for a job within the last 12 months.)
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4. WHERE THE NEW JOBS WERE CREATED
For those people looking for work, the following paragraphs from the BLS commissioner’s report indicates where the new jobs were created. If you are looking for a job, these areas may offer employment opportunities.
In October, health care employment rose by 31,000, with gains in ambulatory health care services (+19,000) and hospitals (+13,000). Over the year, health care has added 415,000 jobs.
Employment in professional and business services continued to trend up over the month (+43,000) and has expanded by 542,000 over the year. Within the industry, computer systems design and related services added 8,000 jobs in October. Employment in management and technical consulting services continued an upward trend (+5,000).
Employment in financial activities also continued to trend up in October (+14,000). Insurance carriers and related activities added 8,000 jobs. Over the year, financial activities employment has grown by 172,000.
Employment in other major industries–mining, construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, leisure and hospitality, and government–changed little over the month.
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