The BLS labor market bulletin for July reports total non-farm employment increased by 162,000 jobs and the unemployment rate inched down to 7.4 percent (down 0.2 percentage points from 7.6% in June). A closer look at the fine print of the gross statistics reveals that structural problems remain.
The report includes a downward revision of 26,000 from the previously reported May (175,000) and June (195,000) jobs’ totals. Thus the reported 162,000 jobs gain is in fact 13,000 below a 3 month average of 175,000.
Part of the drop in unemployment is accounted for by drop outs from the labor market (the so-called discouraged workers). The labor force participation rate declined 0.1% (from 63.5 to 63.4%), while the portion of the population employed remained at 58.7%. So despite the decline in the unemployment rate the number of workers unable to find work increased and no new jobs were created relative to the size of the working age population.
Moreover 52.5 percent of jobs (85,000 of 162,000) were generated in the low wage sectors of Retail Trade (47,000) and Leisure and Hospitality (38,000). This is likely a factor behind the decline in average weekly earnings. Relative to June, average weekly earnings (Private non-farm industries) were down $3.09 overall. While in Retail Trade and Leisure / hospitality, the sectors accounting for half of all growth, the declines were 90 cents and 83 cents respectively. The number of average weekly hours remained the same for both these sectors, which is to say that within the ‘growth’ industries, workers saw no improvement in their incomes. In addition to the 11.5 million officially unemployed, 8.2 million workers remain ‘persons employed part time for economic reasons’, more accurately the under-employed, people whose hours were cut or for whom full-time employment is unavailable.
These low wage job additions for July are neither one months’ ‘noise’ nor a seasonal summer uptick, but rather in line with the deliberate design of a low wage / part-time neo-liberal economy. The data are further confirmation that 69 months from the December 2008 start of the Lesser Depression, and 51 months from the beginning official “expansion” in June 2009, the private sector is incapable of generating job creation and a recovery. We reiterate again the call for a jobs program. Short of a committed national policy program along these lines we will be treated to recurring monthly bulletins on the ongoing Lesser Depression.