Political Calculations
Unexpectedly Intriguing!
September 18, 2014

After looking at the overall history of the net change in the number of full time and part time jobs in the U.S. since 1968, we had a question that relates to the job market today: What broke the job market in the United States?

To see what we mean, let's focus in on the period since the official beginning of the so-called "Great Recession" in December 2007, when the previous period of economic expansion in the U.S. last peaked according to the National Bureau of Economic Research before falling into recession. The chart below measures the net change in the number of full time, part time and the total number of jobs from that point through the present.

Net Change in Full Time and Part Time Employment Since December 2007 (Beginning of 'Great Recession'), Through August 2014

Here, we see a large increase in the number of part time jobs during the official period of recession as the number of full time jobs plummeted, which coincides with the displacement of Americans working full time during the recession. That increase in part time jobs however basically ends after the U.S. officially exited from the recession, where we also observe the rate of decline in the number of full time jobs begin to decelerate.

By December 2009 however, the number of full time jobs begins to make a robust recovery, as the number of part time jobs begins to decrease slightly, suggesting that a number of Americans working part time transitioned to working full time.

And then, things begin to go haywire in and after March 2010. What had been a robust recovery in full time employment suddenly becomes choked off as working Americans were shunted back into part time employment. The number of Americans working in full time jobs then began to fall until November 2010, which coincides with the Federal Reserve's announcement that it would intervene in the U.S. economy by beginning a new round of quantitative easing to stimulate economic growth.

Shortly afterward, the number of full time jobs began to increase again, but the number of part time jobs remained stagnant. The pattern where Americans working in part time jobs transitioned to full time employment is no longer present, and unlike previous periods of economic expansion, there is no general increase in the number of Americans working part time as the economy recovers.

We won't keep you in suspense. The most likely culprit behind the growth of part time jobs in the U.S. economy was the passage of Obamacare, officially known as the Patient Protection and Affordable Care Act. The chart below shows the stagnation of part time employment in the United States since the Affordable Care Act (ACA) was signed into law in March 2010.

Net Change in Full Time and Part Time Employment Since March 2010 (Passage of Obamacare), Through August 2014

That outcome is contrary to what many expected after the passage of the ACA, where the law's changes to the number of hours that an employee could work before being qualified as a full time employee for whom the employer would be required to provide costly health insurance coverage would lead employers to create fewer full time jobs and more part time jobs.

Here, the law changed the definition of what is considered to be full time employment from an average of 35 hours per week to just 30 hours per week.

But it is evident that the feared outcome of more part time jobs being created at the expense of full time jobs has, at least since the Fed began stimulating the U.S. economy through its various quantitative easing programs, has not come to pass. What we observe instead is that it is part time employment that has not increased in any meaningful way since Obamacare became law.

So we'll offer a hypothesis for why that might be: the Affordable Care Act's lowered definition of the number of hours that need to be worked in a week to qualify as full time employment is leading employers to create considerably fewer jobs where the number of hours worked falls in the range between 30 and 35 hours per week.

That range is significant because the Bureau of Labor Statistics and the U.S. Census Bureau, who collect the data on the number of Americans working in full time and part time jobs, did not change their definition of the number of hours of work each week that qualifies as full time employment: a minimum of 35 hours per week.

It is then that part of the job market that Obamacare has broken, and there is some evidence that the U.S. job market is not adding a meaningful number of jobs within that margin. And we suspect that the absence of jobs being created within that margin plays a big role in the assessment of Americans that there is and has been no meaningful economic recovery since the official end of the last recession.

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September 17, 2014

We have a project underway where we're looking at the net change in the number of Americans who work as full time or part time employees over different periods of time. The chart below shows all the data the Bureau of Labor Statistics and the U.S. Census Bureau have reported since they began regularly tracking each type of employment since January 1968.

Net Change in Full Time and Part Time Employment Since January 1968, Through August 2014

One of the things that stands out in looking at the chart is that part time employment actually grows during periods of recession, while full time employment would appear to take the hit, where a good part of what we're seeing is the result of previously full-time workers being pushed into more marginal, part-time employment. Interestingly though, one other thing that we observe is that while part time employment tends to rise sharply during periods of recession, during periods of economic expansion, it tends to rise slowly with the growing economy.

But with two very noticeable exceptions. The first exception is the period from 1994 through 2001, which coincides with a change in the U.S. Census Bureau's methodology for collecting and reporting employment status data beginning in January 1994. As such, we really can't break out the effect of what might be the result of that change in methodology from other changes affecting the U.S. job market at that time.

The second exception is the period since the official end of the December 2007-June 2009 recession through the present day, where it would seem that the U.S. economy has simply lost the ability to generate new part time jobs outside of recession, suggesting that aspect of the U.S. job market has broken down.

One last major point of interest is the surge in the number of Americans working in full time employment that we observe during the peak of the Dot-Com Bubble in 2000. Perhaps if not for that unsustainable bump, Americans would not have noticed the recession of 2001 as the number of Americans working full time returned to grow at the level of the pre-bubble trend.

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September 16, 2014
Image Source: http://tax.illinois.gov/businesses/taxinformation/income/corporate.htm

Where do you stack up in the distribution of income within the United States?

We can help you answer this question using the data that the U.S. Census Bureau has collected on the total money income earned by individual Americans, as well as for the families and households into which Americans gather themselves!

If you're a visual person, we'll first present the information graphically in animated chart form and then we'll present a tool where you can get a more precise estimate of what your percentile ranking is within each of these groups. In the charts below, first find the income that applies for you on the horizontal axis, then move directly upward to the curve that defines the cumulative distribution of income. Once you've found your place on S-shaped curve in each chart, look directly to the vertical scale on the left hand side of the chart to determine your approximate U.S. income percentile ranking.

The animated chart below will take you through the following progression, showing the cumulative total money income distribution for U.S. women, men, individuals, households and families in 2013. Each of the charts will be displayed for five seconds and will cycle back to the beginning after running through each of the charts. The charts will also indicate the median and average income earned by each category.

Animation: 2013 Cumulative Distribution of Total Money Income in U.S. for Women, Men, Individuals, Households and Families

That's it for the pictures - let's find out precisely where you really fit in! To find out where you, your family or your household ranks among each of these categories, just enter your personal income, your family's income, which includes the incomes of your spouse and other family members who live with you, and also the combined income of just the people who live within the walls of the same household that you do. We'll do some quick math and provide a more precise estimate of the percentage of all American individuals, families and households that you outrank given the incomes you enter.

And as a bonus, we'll also break down the numbers for your Individual income to tell you how you compare to your fellow male and female Americans.

It all starts below! (Unless you're accessing this article through a site that simply republishes our RSS news feed, in which case, you should click through to our site to access a working version of our tool....)

Income Data
Input Data Values
Select Year of Interest
Your Personal Total Money Income
Your Family's Combined Total Money Income
Your Household's Combined Total Money Income

Your Estimated U.S. Income Percentile Ranking
Calculated Results Values
Among All U.S. Individuals with Incomes
 - Among All U.S. Men with Incomes
 - Among All U.S. Women with Incomes
Among All U.S. Families
Among All U.S. Households

For our readers who live outside of the United States, you can still get in on the action if you convert your income from your local currency into U.S. dollars first!

Notes

The default data we've presented in the tool above represents the average total money income of U.S. individuals, families and households for the year you select. Oh, and as a bonus, you can also see where you would have fit in the U.S. income distributions we've modeled going back to 2011 by selecting your year of interest (other years may appear in the future!...)

In the tool above, your percentile ranking indicates the percentage of Americans who either share your income or earn less than you do. As such, it tells you what percentage of the population you're above in the income-earning food chain.

For example, a percentile ranking of zero would indicate that you are at the very bottom end of the American income spectrum, while a percentile ranking of 100 indicates that you are effectively at the very top end. A percentile rank of 50.0 would indicate that you're within spitting range of being the middle of all Americans, as our tool should be able to place most people within 0.2% of their actual percentile ranking.

Finally, if you're looking for the income data for this year, please note that the U.S. Census Bureau will report the data it collects for this year sometime in September of next year. The delay isn't all bureaucratic - they send out the surveys for income in March of each year, just as or after most Americans fill out their income taxes for the previous year so their income figures are still fresh in their memories, and then it can take the Census Bureau's statisticians up to six months to sort it all out and make some kind of coherent sense of it all!

Income Inequality

If you're seeking to understand what really drives income inequality in the United States, including what has caused it to appear to increase since 1947, you've come to the right place! Here's a short list of our previous posts on the topic:

  • The Discovery of the Unseen (2012) - we go where so-called experts on income inequality fear to tread and reveal that U.S. household income inequality has increased over time mostly because more Americans live alone!
  • The Real Story of "Rising" U.S. Income Inequality - we find that social factors, rather than economic ones, account for virtually all of the claimed increase in income inequality over time.
  • The Major Trends in U.S. Income Inequality Since 1947 (2013, Part 1) - we revisit the U.S. Census Bureau's income inequality data for American individuals, families and households to see what it really tells us.
  • The Widows Peak (2013, Part 2) - we identify when the dramatic increase in the number of Americans living alone really occurred and identify which Americans found themselves in that situation.
  • The Men Who Weren't There (2013, Part 3) - our final anniversary post installment explores the lasting impact of the men who died in the service of their country in World War 2 and the hole in society that they left behind, which was felt decades later as the dramatic increase in income inequality for U.S. families and households.
  • Debunking Income Inequality Theory - we revisit the inflation and deflation of the Dot-Com stock market bubble to demonstrate how the topmost and bottommost portions of the spectrum of U.S. income earners realized directly proportional benefits to each other, even though the measure of income inequality made it seem like income inequality increased during that period.

Data Sources for 2013 Incomes

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Person Income Tables. PINC-01. Selected Characteristics of People 15 Years Old and Over by Total Money Income in 2013. Total Work Experience, Both Sexes, All Races. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Person Income Tables. PINC-01. Selected Characteristics of People 15 Years Old and Over by Total Money Income in 2013. Total Work Experience. Male. All Races. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Person Income Tables. PINC-01. Selected Characteristics of People 15 Years Old and Over by Total Money Income in 2013. Total Work Experience. Female. All Races. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Person Income Tables. PINC-11. Income Distribution to $250,000 or More for Males and Females: 2013. All Races. Male. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Person Income Tables. PINC-11. Income Distribution to $250,000 or More for Males and Females: 2013. All Races. Female. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Family Income Tables. FINC-01. Selected Characteristics of Families by Total Money Income in 2013. All Races. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Family Income Tables. FINC-06. Percent Distribution of Families, by Selected Characteristics Within Income Quintile and Top 5 Percent in 2013. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Family Income Tables. FINC-07. Income Distribution to $250,000 or More for Families: 2013. All Races. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Household Income Tables. HINC-01. Selected Characteristics of Households by Total Money Income in 2013. All Races. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Household Income Tables. HINC-05. Percent Distribution of Households, by Selected Characteristics Within Income Quintile and Top 5 Percent in 2013. [Excel Spreadsheet]. 16 September 2014.

U.S. Census Bureau. Current Population Survey 2014 Annual Social and Economic (ASEC) Supplement. 2013 Household Income Tables. HINC-06. Income Distribution to $250,000 or More for Households: 2013. All Races. [Excel Spreadsheet]. 16 September 2014.


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September 15, 2014

Because it is always fun to make fun of poorly timed stock market-related headlines, we thought we'd start this week by sharing an instant classic, which we captured for posterity on the Wayback Machine on Tuesday, 9 September 2014:

Morning Moneybeat: Bears Capitulate

Now, here's why that's funny. Beginning on Monday, 8 September 2014, the day before the WSJ's unfortunately timed article, we began capturing a very noticeable change in the future expectations for investors. Specifically, investors were adjusting their expectations, as measured by the change in the growth rate of future trailing year dividends per share, for the fourth quarter of 2014 and the first quarter of 2015:

Change in Growth Rates of Expected Future Trailing Year Dividends per Share with Daily and 20-Day Moving Average of S&P 500 Stock Prices, 2014 through 12 September 2014

In this chart, we see that investors shifted their expectations for when a portion of the dividends that they previously had been expected to be paid in 2014-Q4 would instead be paid in 2015-Q1.

Now, that minor shift in the timing of when some dividends will be paid doesn't change the overall expectations for the total amount of dividends that will be paid out in the future at all. But the expectations of when those dividends would be paid does matter, because it is the expectations that investors have for specific points of time in the future that affects stock prices.

In our previous installment of this long-running series, we noted that investors had been focused on 2014-Q4 in setting stock prices. And until last week, that had meant generally rising stock prices.

But that changed as soon as the expectations for the amount of dividends that will be paid out in 2014-Q4 changed. Our rebaselined model of the alternate trajectories that stock prices are most likely to follow best captures the effect of the change in investor expectations:

Alternate Futures for S&P 500 Stock Price Trajectories - Third Quarter of 2014, Snapshot through 12 September 2014 - Rebaselined Model

As long as investors remain primarily focused on 2014-Q4 in setting stock prices, investors can reasonably expect that the S&P 500 index will follow the trajectory indicated for that alternative future. And since the expectations for that specific point of time in the future took a turn to the downside, stock prices followed, as the stock market laughed at the capitulating bears.

Analyst Notes

We expect that our rebaselined model will continue to provide a better indication of the likely trajectory of stock prices through mid-October 2014, as that will mark the end of the echo effect associated with the large scale noise events of June-October 2013. We should be able to return to our standard model at that time.

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September 12, 2014

While many were disappointed by the lackluster jobs numbers recorded in the August 2014 employment situation report, perhaps the most disappointed of all would be the teens and young adults (Ages 16-24) who were effectively replaced in the U.S. job market by adults (Age 25 and older) during the month.

Change in Number of Employed in U.S. Since Total Employment Peak in November 2007, Through August 2014

We're going to go out on a limb here and say that a disproportionate number of teens and young adults in the state of California were on the losing side of the job market in August 2014. We should have August's data for teens (Age 16-19) in the "Golden State" later this month.

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Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

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