Real (Population Adjusted) Job Gain is a Loss of 108,000

Inside the BLS Employment Situation Report

This is my monthly look inside the BLS Employment Situation Report. There are two BLS Surveys: the Establishment and the Household. Establishment surveys about 141,000 businesses and government agencies, representing approximately 486,000 individual worksites. It is taken each month during the week which includes the 12th of the month. Household is a survey of 60,000 households taken each month during the week which includes the 12th of the month.

Each item below is suffixed with (H) if it is from the Household Survey, (E) if it is from the Establishment Survey, and (B) if it is from both.

– Nominal Nonfarm jobs was +169,000. (E). The two previous months’ gains were revised to +104,000 (June) and +172,000 (May). Those had been +162,000 (July) and +188,000 (June.) That is a loss (for July and June) of -74,000 from the previous report making the net gain of 95,000 in jobs since the last report.

– the size of the civilian noninstitutional adult population increased by 203,000 in August to 245,959,000 (H). With a labor participation rate of 63.2% 203,000 more jobs were necessary to keep pace with population growth. We had 108,000 fewer jobs added than that including the changes from April and March. (H) The Employment/Population ratio fell to 58.6%.

The Labor Participation Rate fell from 63.4% to 63.2%. It was 63.5% a year ago.

The civilian noninstitutional population is 2,393,000 (H) more than 12 months ago. With a labor participation rate of 63.2% we require 1,512,000 more jobs in the past 12 months to keep pace with population growth. We had 2,006,000 (H) more folks working. The increase in real (population adjusted) jobs in the past year is 387,000.

– Real (population adjusted) job growth in August was -108,000. This accounts for the changes for June and July. – the Unemployment Rate was 7.278% down from 7.390% in July 2013(B). – Average hourly earnings was $24.05 up from $24.00 in July 2013 (E) – Average work week was 34.5 hours up from 34.4 hours July 2013 (E) – Private jobs were +152,000. Government jobs were +17,000 (E)

-Good producing jobs were +18,000. The two previous months were revised to +6,000 and -14,000 (E)

-The size of the civilian labor force fell from 155,798,000 to 155,486,000 a decrease 312,000. (H) This drop in the Labor Force contributed to the fall in the Unemployment Rate.

-The labor participation rate (percent of adult noninstitutionalized population who are part of the labor force) was 63.2.% down from 63.4%. It was 63.7% a year ago. (H) This, not the unemployment rate, is the number which should get everyone’s attention. It is this 63.2% of the adult noninstitutionalized population who get pay checks and contribute to GDP.

 

According to the 4 week moving average of Initial Jobless Claims, 1,314,000 people lost their jobs in the last 4 weeks. That normalizes to 1,423,500 lost jobs in a calendar month (there are about 13 4-week periods in a 12 month year.) This is down from the previous month’s 1,423,500 jobs lost/month.

In August 2013 BLS measured 4 sets of people entering or leaving the jobs market:

– Job losers and persons who completed temporary jobs was 5,970,000 up 49,000 from previous month’s Job Losers and down 965,000 from August 2012. (H)

– Job leavers was 893,000. This includes anyone who retired or voluntarily left working. This down 86,000 from previous month and down 63,000 from August 2012. (H)

-Reentrants was 3,129,000. Reentrants are previously employed people who were looking for a job and found one. This was -129,000 from the previous month and -187,000 from August 2012.(H)

-New entrants were 1,299,000. These are people who never worked before and who are entering the labor force for the first time. This was +31,000 from previous month and -45,000 from August 2012.

One line in the BLS Report is termed “people employed part-time for economic reasons.” These are people who want to work full time but their employer, for whatever reason, decide to employ them only part-time. In this month’s report there were 334,000 fewer people working part-time. This may be the most positive part of the report. Transition from part-time to full-time is a positive for the economy

The presentation of the total change in jobs is like looking at the final score of a game. The details tell the story:

– 169,000 more people are working.

– 312,000 fewer people are in the civilian labor force

The unemployment rate decreased 0.112%. We are +387,000 real (population adjusted) jobs for the past 12 months. This is not what a recovery looks like. Cheering that the Unemployment rate dropped to the lowest level in 5 years only because folks have given up looking for jobs and are technically no longer unemployed is just plain dumb.

There has been a significant change in the jobs market. Many jobs including manufacturing jobs require technical skills and a college degree. The very large increases in the cost of college education are making education less affordable as it becomes more necessary. The people graduating from college do not have the right skills for the tech-oriented jobs which are out there. We are producing (to oversimplify) too few engineers. The jobs being added are low paying jobs.