August Jobs Report Reveals Zero Net Jobs Created For The First Time Since 1945
For the first time in 66 years, the monthly jobs report shows zero net jobs created in the month of August:
The US economy created no jobs and the unemployment rate held steadily higher at 9.1 percent in August, fueling concerns that the US is heading for another recession.
It was the first time since World War II that the economy had a net zero jobs created for a month.
Economists had been expecting the report to show a net of 75,000 jobs created, an unusually low number considering the US is technically more than two years removed from the end of the last crisis.
Markets had been closely watching the August report in hopes that the employment picture would begin to show signs of recovery.
Private payrolls actually created 17,000 jobs, but was offset by continued shrinkage in government.
Average hourly earnings slid cents to $23.09.
Among the more disturbing numbers: the amount of people “marginally attched to the labor force” rose to 2.6 million from 2.4 million. These are workers not included in the unemployment count because they had not sought work in the past four weeks but have looked in the past year.
The details about these “marginally attached” workers is fairly distressing:
About 2.6 million persons were marginally attached to the labor force in August, up from 2.4 million a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)
Among the marginally attached, there were 977,000 discouraged workers in August, down by 133,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.6 million persons marginally attached to the labor force in August had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities. (See table A-16.)
Further details from The New York Times.
Digging deeper into the report you find that nearly 60% of the unemployed have been without a job for 15 weeks or more, with 43% being out of work for 27 weeks or more. And, the June and July numbers turned out to be even worse than we thought. June’s net job created number was revised downward from +46,000 to +20,000. July’s number was revised downward from +117,000 to +85,000.
This is obviously incredibly bad news. Even if you take into account the roughly 45,000 Verizon workers that were out on strike in August, that gives us, at most, net job creation of around 30,000 or so. Which is really nothing, and certainly not enough to fix the unemployment problem.
Some will point to the past several months worth of lost jobs in the government sector and argue that this means that we shouldn’t be cutting spending on the Federal or State levels. In fact, that’s just what Matthew Yglesias says in a column that went up shortly after the report came out:
The public sector has been steadily shrinking. According to the conservative theory of the economy, when the public sector shrinks that should super-charge the private sector. What’s happened in the real world has been that public sector shrinkage has simply been paired with anemic private sector growth. This is what I’ve called “The Conservative Recovery.” Conservatives complain about the results because the President is a Democrat named Barack Obama. But the policy result is what conservatives say they want. Steady cuts to the government sector, offset somewhat by private sector growth. The reality is that this dynamic sucks, and we ought to be forcefully trying to avoid public sector layoffs knowing that workers are also customers for the private sector. But we’re not.
The problem with Yglesias argument is that the government layoffs we’ve seen have come for a very simple reasons — we cannot afford them anymore. Across the country, states and localities have been faced with budget shortfalls and sluggish tax revenues (due to the sluggish economy, not the fact that taxes are too low) and budget cutting is the only option they have. More importantly, while government workers do spend their paychecks in the private economy, their impact on the economy as a whole isn’t going to be enough to spur economic growth. Government jobs in and of themselves do not create economic growth, and stopping localities from making the budget cuts necessary to keep themselves solvent is not going to stimulate the economy. Only the private sector can do that, and right now they’re not hiring and appear to be on the verge of layoffs that could send us into another recession.
Does anyone really think that there’s anything the President says next Thursday is going to change that?