Jobs report: Inside the numbers
James Pethokoukis of AEI blog delved into the numbers from the latest jobs report and, not surprisingly, finds it a downer.
This was not a good jobs report. Certainly not one that suggests a shift into a higher growth gear. The Two Percent-ish economy crawls on. The US economy added 142,000 jobs in August — much less than 225,000 expected — as the unemployment rate ticked down to 6.1%. But the jobless rate fell only because the labor force shrank by 64,000, notes economist Paul Ashworth of Capital Economics. The alternative household survey found employment increased by only 16,000 last month. Also, payroll gains in June and July were revised lower by 28,000, although those downward revisions were all in government. Private payrolls were actually nudged up, according to RDQ Economics. And consider: There are just 1.2 million more private jobs today than January 2008 despite 15.6 million more non-jailed, non-military adults. While the unemployment rate has dropped by 1.1 percentage points over the past year, the employment rate is up just 0.2 points.
Still, the year overall is shaping up as one of modest employment improvement. Average monthly jobs gains, including the August bummer, are averaging 215,000 vs. 194,000 last year, and 186,000 in 2012, calculates economist Justin Wolfers. Two more bits of good news: Long-term unemployment finally fell below 3 million, and the underemployment rate fell to a new recovery low of 12.0% from 12.2% in July. Overall, Barclays calls the report a “reality check” after a series of robust economic surveys, and forecasts that it “will likely reduce the probability that the Fed takes an abrupt change in tone in September to a more hawkish policy stance, and we continue to see longer-term economic trends as consistent with a June 2015 rate hike.”
One more thing: Wages are still a problem, with average hourly earnings up just 2.1% the past year.
Even the "good news" shows only marginal improvements that might be expected largely because things were so bad previously the numbers had nowhere to go but up.
The anemic economy is generating jobs at the top and bottom, not so much in the middle. “Average is over” as economist Tyler Cowen has put it And data yesterday from the Federal Reserve show that while income rose by 10% for the most affluent 10% of American families in 2010 through 2013, incomes were flat or falling for everybody else.
With wages barely keeping pace with the "official" rate of inflation, most Americans find themselves slipping down the economic ladder. Democrats believe the problem can be solved in Washington. Republicans believe Washington is the problem. Those clashing worldviews will be the major issue of the 2014 mid term and 2016 presidential elections.