The August Jobs Story - Dismal, Very Dismal

The headline statistic on jobs in August 2010 is that the seasonally adjusted unemployment rate went up slightly to 9.6% from 9.5% in July and June.  However, in a long recession especially, the usual unemployment rate statistic may not be very useful because many people have given up on finding a job so long ago that the statistics do not reveal that in a better economy many of the unemployed would want a job.  Last year, I realized that it makes more sense to track the number of missing jobs by comparison to a time when people had plentiful and well-paying jobs.  The number of jobs wanted and needed might better be compared to the number needed to keep the same fraction of the population employed or actively looking for work as was the case in that good time.  Because the population is increasing, the number of needed and desired jobs should be increasing also.  The time I chose to compare to was January of 2000 when the workforce was at a high rate of 67.49% of the noninstitutional civilian work age population and the unemployment rate was 4.04%!  Times were good and many people wanted to work.

The updated table of job and unemployment statistics is given below.  The most important things to take note of are the fact that the work age population grew by 209,000 people in August, the number of employed people dropped by 215,000, and the number of missing jobs grew by 356,000 jobs relative to July!  This is an awful trend!  Yet the usual story using the unadjusted employment numbers actually would imply an improvement, since the seasonally unadjusted unemployment rate actually improved from July's 9.75% unemployment to August's 9.54% unemployment.  This happened because the number of people actively looking for work took a nosedive in August.  All that means is that those who would like to have a job became more discouraged in August than they already were in July!

For the third month in a row, the number of government jobs decreased.  114,000 census jobs died in August, causing a total loss of government jobs of 121,000 in August.  State and local government lost 10,000 jobs.  This is actually good news as the burden of paying for these jobs is lifted from the private sector.  The private sector added 67,000 jobs in August, which is fewer than it added in July, but more than in May and June.  So far this year, the private sector has added jobs each month.  August was the first month this year that manufacturing jobs decreased (by 27,000), after they had decreased every month in 2009 and after January of 2008.  Most of the private sector job increase was in services such as health care, leisure and hospitality, and professional and business services.  Construction had a small increase of 19,000 jobs.

The average work week for nonfarm private employees is only 34.2 hours.  The average hourly earnings are $22.66.  The number of full-time employed workers fell by 1,254,000 people from July to August, while the number of part-time employed workers increased by 1,039,000 workers!  This is another hidden measure of the July to August catastrophe.

Lawrence Katz, a Harvard University economics professor, says that about 300,000 jobs need to be added each month for 4 years to return the unemployment situation to where it was prior to the recession [Wall Street Journal, 4-5 September 2010].  By my missing job chart, just to get back the situation of December 2007, the economy has to create 9.75 million new jobs on top of the number needed to keep up with population growth.  Based on the growth of the noninstitutional civilian work age population growth from January 2000 to January 2010, the economy must produce about 158,000 jobs a month to keep up with the needed number of jobs due to the population increase, assuming that 67.49% of them want jobs as they did in January 2000.  To catch up to the "mere" 11,023,000 missing jobs of December 2007 in a four-year period, the replacement job rate is 203,000 jobs a month to be added to the population growth rate of 158,000 per month for a total job creation rate needed of 361,000 jobs per month!  The professor is coming in a bit low!  Any month in which 361,000 jobs are not created is a month of slow recovery from the recession, if not a month of deepened job recession.

We will need a much more business and wealth friendly environment than Obama will allow us to have if we are to create jobs over a four-year period at a rate of 361,000 per month.  That is simply not going to happen with the socialist redistributionist in chief at the helm.  Even should the Republicans capture the House and even the Senate, that is not going to happen.  We will need a committed return to a concept of much more limited government and a very renewed confidence in Capitalism and individual choice for that to happen.  So, we will be faced with a job insufficiency for a long time to come.  This weighs particularly heavily on those in their late 50s and in their 60s who lose jobs, on the young, and on those who are under-educated.  The young who do work will be much over-burdened by the ever-increasing numbers of people on social security and medicare, not to mention paying the huge benefit packages for government employees and government retirees.  There will be many sad stories for Americans for a long time to come.  The consequences of having chosen socialist principles of government for a long time have accumulated and have been wrecking havoc.  The drag on the economy has been evident in the missing job increase since the start of 2000 with the recession accelerating that trend.

Back to the month of August:  It fell short of the goal of adding 361,000 jobs by a mere 576,000 jobs.  This kick in the teeth just prior to the November election ought to be a kick in the teeth for the Party of Mass Job Destruction, the Democrats.  It is being hidden by the foolish method the Bureau of Labor Statistics uses to measure unemployment.  Nonetheless, the people know something is very wrong.