The jobs report released this morning by the Bureau of Labor Statistics showed the labor market gained just 169,000 jobs in August, while downward revisions of 74,000 to earlier months’ data brought the average monthly growth rate of the last three months to just 148,000 jobs. The unemployment rate decreased from 7.4% to 7.3%. However, this decline was entirely due to jobless workers leaving the labor force, not those finding work. The labor force participation rate dropped to its low of the downturn, 63.2 percent.
“With unemployment high across all categories, long-term unemployment at near record levels, and wage growth being held down because employers know workers don’t have any other options, now is no time to take our foot off the gas,” said EPI Economist Heidi Shierholz. “If anything, we should be hitting the gas pedal harder.”
In her analysis, Shierholz explains that in the current labor market, the unemployment rate is a poor metric to judge the health of the labor market. “Remember, jobless workers are not counted as being part of the labor force unless they are actively looking for work,” writes Shierholz. “If the labor market were healthy, the labor force would number about 159.3 million. But the actual labor force numbers just 155.5 million. That means there are about 3.8 million missing workers, who would be in the labor force if job opportunities were strong. If these 3.8 million missing workers were in the labor force looking for work, the unemployment rate would be 9.5 percent instead of 7.3 percent.”
Shierholz also looks at public sector employment, which increased slightly in August but which is still nearly 1.5 million jobs less that it should be, and examines addition trends in the labor market that are due to weak hiring.