August Jobs Numbers "Even Worse Than They Look"
In an op-ed posted Friday at the Wall Street Journal website, Mort Zuckerman, editor-in-chief of U.S. News & World Report begins:
"Don't be fooled by the headline unemployment number of 8.1% announced on Friday. The reason the number dropped to 8.1% from 8.3% in July was not because more jobs were created, but because more people quit looking for work."
Here are what seem to be the key points from Zuckerman's analysis:
"The number for August reflects only people who have actively applied for a job in the past four weeks, either by interview or by filling an application form. But when the average period of unemployment is nearly 40 weeks, it is unrealistic to expect everyone who needs a job to keep seeking work consistently for months on end. You don't have to be lazy to recoil from the heartbreaking futility of knocking, week after week, on closed doors.
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"The key indicator of our employment health, in all the statistics, is what the government calls U-6. This is the number who have applied for work in the past six months and includes people who are involuntary part-time workers—government-speak for those individuals whose jobs have been cut back to two or three days a week.
"They are working part-time only because they've been unable to find full-time work. This involuntary army of what's called "underutilized labor" has been hovering for months at about 15% of the workforce. Include the eight million who have simply given up looking, and the real unemployment rate is closer to 19%.
"In short, the president's ill-designed stimulus program was a failure. For all our other national concerns, and the red herrings that typically swim in electoral waters, American voters refuse to be distracted from the No. 1 issue: the economy. And even many of those who have jobs are hurting, because annual wage increases have dropped to an average of 1.6%, the lowest in the past 30 years. Adjusting for inflation, wages are contracting.
"The best single indicator of how confident workers are about their jobs is reflected in how they cling to them. The so-called quit rate has sagged to the lowest in years."
At the American Enterprise Institute's blog, AEIdeas, James Pethokoukis posted the following chart on Friday showing the "average hourly earnings of private non-supervisory workers." According to Pethokoukis, it's "(o)ne of the most devasting charts showiong this is a non-recovery."
For additional analysis of the August jobs report, see this Associated Press story posted by ABC News, this story at the LA Times, or this story in Forbes magazine. From the think tanks, there's this comprehensive Issue Brief #3719, dated September 7, 2012, from the Heritage Foundation.
Finally, at the Mercatus Center, senior fellow Keith Hall posted the following chart, which he terms "the single most accurate indicator of labor market health:"