Jobs - What Jobs?
At a time when President Obama is about to unveil a new "jobs" bill today's employment report, or lack thereof, certainly doesn't go far to support his cause. Not only did the economy create ZERO jobs this past month July's 117,000 jobs was recast to just 85,000. More disturbing was what lay below the headline number. For those that have jobs the average work week was reduced to 34.2 hours while average hourly earnings declined by three cents to $23.09. When the average American is seeing food and energy costs rise, currently consuming over 22% of wages of salaries, less working hours and lower wages exacerbate the problems at home and reduce aggregate demand on businesses.
The number of unemployed persons, at 14.0 million, was essentially unchanged in August, and the unemployment rate held at 9.1 percent which has shown little change in the last several months. Given the fact that civilian population has increased by some 200,000 persons a month since Janaury shows the number of people who are simply not counted in this report at all or the unemployment rate would be closer to 13% rather than 9%. This is shown in the labor force participation rate which has now fallen to the lowest level since 1983.
The number of long-term unemployed (those jobless for 27 weeks and over which is still at the highest levels on record) was about unchanged at 6.0 million in August and accounted for 42.9 percent of the unemployed. The labor force rose to 153.6 million in August which is not good as this will continue to put pressure on employment to population ratio and, ultimately, the unemployment number itself.
Both the civilian labor force participation rate, at 64.0 percent, and the employment-population ratio, at 58.2 percent, were little changed. The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose from 8.4 million to 8.8 million in August. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. These individuals are not counted in the U-3 number which is where the 9.1% unemployment rate comes from.
About 2.6 million persons were marginally attached to the labor force in August, up from 2.4 million a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.
Among the marginally attached, there were 977,000 discouraged workers in August, down by 133,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.6 million persons marginally attached to the labor force in August had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.
The U-6 number, which is the total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force rose to 16.2% from 16.1% last month and is now near levels where we were a year ago.
With all of this data in mind we now turn to the prospects of seeing a return to a level of "full employment" as predicted by the Fed and the White House by 2020. The chart shows the current level of employment relative to the population. As stated previously the population is growing by about 200,000 and in order to return to historical full employment levels it would require an employment to population ratio of 67.3%. Therefore, in order to reach that mark by 2020 we would need to create 400,000 jobs a month or 43 MILLION new jobs (trajectory is dotted green line). Unfortunately with ZERO job growth this month and an average of just 116,000 jobs since this year - we are already pretty far behind the mark.
Obama and his new "jobs" plan may already be dead on arrival.