Employment Level Falls by 115,000 in August, Unemployment Rises to 10.3%


The Bureau of Labor Statistics released the August employment report yesterday, and the less-than rosy headline numbers – 169,000 jobs added (less than expected) and a supposed drop in the unemployment rate to 7.3%, masked a pretty ugly assessment of employment in America and cast further doubt on the strength of the recovery.

The report consists of two surveys – the establishment survey, from which the report draws its figure for the number of jobs created, and the household survey, used to calculate the unemployment rate.  It’s the latter suvey that paints a bleak picture.  The “employment level” (the number of Americans working) actually fell by 115,000 to 144.2 million people – 2.4 million less than were working in November of 2007 when the recession began.  To put into perspective just how bad that number is, the U.S. population has increased by 14 million people during that time, and not only have none of them been put to work, but an additional 2.4 million have lost their jobs.  That’s a recovery?

The only reason that the BLS’s unemployment rate fell by a tenth to 7.3% is that, supposedly, yet another 312,000 people have vanished from the labor force.  It’s blatantly obvious that the BLS manipulates the data to make the unemployment rate show continuous improvement. 

It gets worse.  Buried at the end of the report are revisions to the June and July data.  The June figure was cut from 188,000 jobs to 172,000, and the July figure was cut from 162,000 jobs to 104,000 — a recessionary figure. 

And it gets still worse.  U6 unemployment, the figure that includes those who need full-time jobs but have had to settle for part-time work, fell by three tenths of a percent – three times the drop in the headline U3 unemployment rate.  What that means is that not only are the jobs created in August predominantly part-time jobs, but many more full time jobs have been replaced by part-time jobs. 

All of this adds up to a deteriorating employment picture for American workers.  The truth is that, although the top 5% are doing better, the recession never ended for 95% of Americans and has, in fact, gotten worse.  (More on this in a separate post.) 

More bad news from the report:

  1. The number of unemployed Americans rose by 225,000 in August and is little-changed from January of 2012.  Here’s the chart:  Unemployed Americans.
  2. Per capita employment is also little-changed since January, 2012:  Here’s the chart:  Per Capita Employment.
  3. The “detachment from reality index” – the difference between an honest gauge of unemployment and the BLS’s figure which has been held artificially low by claiming that workers have left the work force – hit a new record in August of 3.1%.  (10.34% unemployment vs. the BLS figure of 7.28%.)  In other words, the lie about the U.S. employment picture keeps getting bigger.  Here’s the chart:  Detachment from Reality Index.
  4. Of the 169,000 jobs supposedly added in August (pending future revisions lower), almost all were low-wage jobs.  Employment in auto manufacturing rose by 19,000 as plants retooled for model changeover were restarted – offsetting a drop of 10,000 in July but, otherwise, all other manufacturing employment fell by 5,000.

It seems that every month, economists are surprised by the weakness of the employment data.  But it comes as no surprise to anyone who understands the damage done by misguided trade policy and by the foolish effort to stoke economic growth with cancerous population growth that erodes the economy through reduced per capita consumption.

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