The August 2012 employment report from the Bureau of Labor Statistics showed 96,000 jobs were added in August, a drop from the average growth rate of the first seven months of the year, 145,000. Given month-to-month variability in the data, it is likely that the underlying growth rate is closer to the latter. The unemployment rate declined to 8.1 percent in August, but that was due to workers dropping out of the labor force, not to an increase in the share of potential workers finding jobs. Furthermore, the persistent high unemployment is holding down wage growth – both hourly and weekly wages saw slight declines in August.
Following the job loss of the Great Recession, the labor market has now been adding jobs for two-and-a-half years. However, while the current pace of growth is roughly what’s needed for the unemployment rate to hold its ground as the population grows, we need much faster job growth to meaningfully bring the unemployment rate down in a reasonable timeframe. For example, we’d need to add around 350,000 jobs a month to get back to the pre-recession unemployment rate in three years.
For a comprehensive examination of not just jobs, unemployment, and wages, but also income, wealth, poverty, and economic mobility, see the forthcoming State of Working America, 12th Edition.