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The Jobs Report for August 2013: School, Crappy Jobs, and Unequal Gains are All In

The short version:

August is the month where large numbers of students return to school. The BLS defines the unemployed as those actively seeking work. Since many students are not actively seeking work at this time, the size of the labor force and both the number of employed and unemployed decrease in seasonal terms in August. Consequently, unadjusted, the labor force declined by 1.225 million. The number of employed dropped by 604,000, and the number of unemployed declined by 621,000. (The sum of these two equals the drop in the labor force.) As a reflection of this, the number of part time workers for economic reasons decreased 634,000.

As expected, these declines are moderated in the seasonally adjusted data, with the labor force decreasing by 312,000, and employment dropping by 115,000 and the unemployed by 198,000.

The jobs or business data are, in part, at odds with the people data. While the labor force declined in August, the jobs data show the number of jobs increasing by 169,000 seasonally adjusted and 378,000 seasonally unadjusted. We may look on the seasonally adjusted number as suspect since the July number of 162,000 was revised downward 58,000 to 104,000 (which is below the level needed to keep up with population growth). In any case, the crapification of American jobs continues. Seasonally adjusted, retail trade added 44,000, healthcare 33,000, professional and business services 23,000, and food and drinking places 21,000. If your great ambition in life is flip burgers or work at Walmart, America remains the land of golden opportunity.

Hours increased slightly in August, and weekly pay reflected this, but both these improvements could be due in part to the stripping out of lower paying involuntary part time positions we saw in the household or people data. As usual, most of these gains were concentrated at the top end.

Real trend unemployment is now 5.2% above the "official" rate of 7.3%.
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Household/Employment Survey

Potential Labor Force

In August, the potential labor force as defined by the Civilian Non-Institutional Population over 16 (NIP) increased 203,000 from 245.756 million to 245.959 million. Multiplying this by the seasonally adjusted employment ratio for July (58.6%) gives a rough estimate of the number of jobs needed to keep up with population growth: .586(203,000) = 119,000. In July, this figure was 120,000. However, the July jobs number was revised down to 104,000, meaning in July jobs did not keep pace with population growth. It would take consistent 200,000+ trendline job growth per month to cut into the number without jobs by a million a year and we have 20 million without jobs. (See real unemployment below.)

Labor Force

In August, seasonally adjusted, the labor force decreased 312,000 from 155.798 million to 155.486 million

Unadjusted, the labor force decreased by 1.225 million from 157.196 million to 155.971 million principally as students 16 and older went back to school.

Participation Rate

The respective changes in the labor force are reflected in the participation rate, the ratio between labor force and the potential labor force as represented by the NIP. Seasonally, adjusted the participation rate declined two-tenths of a percent to 63.2%. Year over year, the participation rate has been on decline since 2008, and the 2008 level is itself lower than the levels of the Clinton expansion from 1996 to 2000.

Unadjusted, because of the larger drop in the unadjusted labor force, the participation rate fell six-tenths of a percent to 63.4%.

Employment

In August, seasonally adjusted, employment decreased by 115,000.

Unadjusted, it fell by 604,000 from 145.113 million to 144.509 million.

Employment-Population Ratio

Seasonally adjusted the employment ratio, the ratio of the employed to the potential labor force of the NIP, declined one-tenth percent to 58.6%.

Unadjusted, it decreased two-tenths of a percent to 58.8%.

Unemployment

In August, seasonally adjusted unemployment fell 198,000 to 11.316 million.

Unadjusted, it fell 621,000 to 11.462 million.

As always, it is important to remember that the BLS uses a restrictive definition for unemployed. It does not mean without a job but want one. The BLS uses a jobseeker model. For the BLS, it means without a job and have looked for one in the last 4 weeks.

Unemployment rate

Seasonally adjusted, unemployment fell one-tenth of a percent to 7.3%.

Unadjusted, it fell four-tenths of a percent to 7.3%.

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Full Time vs Part Time Employment

Seasonally adjusted (trendline), full time employment (35 or more hours/week) increased 118,000 to 116.208 million. Part time employment (1 to 34 hours/week) fell 234,000 to 27.999 million.

Unadjusted, full time employment increased 180,000 to 117.868 million. August is usually the peak month in the year for full time employment. Part time employment (actual) fell 784,000 to 26.641 million.

Involuntary vs. Voluntary Part Time Employment

Seasonally adjusted, involuntary part time workers decreased 334,000 to 7.911 million.

Unadjusted, workers in this category, many of whom have gone back to school, fell by 634,000 to 7.690 million.

Voluntary part time workers, seasonally adjusted, increased 211,000 to 19.339 million.

Unadjusted, voluntary part time workers increased by 198,000 to 17.701 million.

As usual, I will note that the distinction between voluntary and involuntary is often in the eye of the beholder. Part time workers for voluntary reasons include those who must work part time because of they are raising children, taking care of a relative, or on Social Security and must restrict their hours to stay below Social Security limits on income. For the workers involved, part time work often is not a voluntary choice.

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The U-6

The BLS' broader measure of un- and under employment, the U-6, dropped, seasonally adjusted (trendline) 0.3% to 13.7%. Unadjusted, it fell 0.7% to 13.6%.

Seasonally adjusted, the U-6 is composed of 11.316 million unemployed, 7.911 million involuntary part time workers, and 2.342 million of the marginally attached (those who have no job but looked for work in the last year but not the last month; a decrease of 82,000 from July), or 21.569 million total, a decrease of 604,000 from last month.

[Standard note]

As said above, the BLS has a restrictive, though internationally recognized, definition of unemployment, that is without a job but have looked for one in the last 4 weeks. The marginally attached are not counted as part of the labor force and their use in the U-6 is an indication that this is what the BLS considers its functional undercount to be.

The BLS also has a more extended category: Not in Labor Force, Want a Job Now (seasonally unadjusted). In August, this fell 571,000 to 6.291 million.

This BLS category does not often reflect well actual movements in the economy. So I have developed a simple alternative to it. I calculate the size of where the labor force should be by multiplying the potential labor force of the NIP by a participation rate characteristic of a solid economic expansion (67%, the Clinton boom was at or above this level for nearly 40 months). The difference between this and the current labor force measures the size of the real BLS undercount, those who do not have jobs but would work if jobs were available to them. This then allows me to recalculate where real unemployment is and where real un- and under employment (disemployment) is.

.67(245.959 million) = 164.793 million (where the labor force should be)

Trend Undercount:
164.793 million — 155.486 million = 9.307 million, an increase of 448,000 from July

Current Undercount:
164. 793 million — 155.971 million = 8.822 million, an increase of 1.361 million
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Real Trend Unemployment (that is seasonally adjusted) :
11.316 million (U-3 unemployment) + 9.307 million (undercount) = 20.623 million, up 250,000
20.623 million / 164.793 million = 12.5%, up 0.1% from last month

Real Unemployment Now (i.e. seasonally unadjusted) :
11.462 million (U-3 unemployment) + 8.822 million (undercount) = 20.284 million , up 740,000
20.284 million / 164.793 million = 12.3%, up0.4%
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Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.623 million + 7.911 million = 28.534 million, down 84,000
28.534 million / 164.793million = 17.3%, down 0.1%

Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 20.284 million + 7.690 million = 27.974 million, up 94,000
27.974 million / 164.793million = 17.0%, up 0.1%

Analysis
The summer bounce is ending and real unemployment and disemployment now are coming back into line with trendline numbers.

Other
The number of long term unemployed (6 months or more) dropped 82,000 to 4.246 million. The long term unemployed account for 37% (unchanged from May-June) of the U-3 unemployed. Year over year, the long term unemployed have fallen by 921,000. It is not clear how many found employment and how many simply stopped looking for work.

White unemployment improved decreased 0.2% to 6.4%. White teen unemployment increased 0.2% to 20.5%. The more volatile African American unemployment increased 0.4% to 13.0%. African American teen unemployment decreased 3.4% to 38.2%.

Self-employed non-agricultural, unincorporated, workers decreased 153,000 seasonally adjusted to 8.678 million, and unadjusted decreased 228,000 to 8.782 million.
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Establishment/Business/Jobs Survey

Jobs

Seasonally adjusted the private sector added 152,000 jobs and government, 18,000 yielding the reported 169,000 total. June which had previously been revised down 7,000 to 188,000 was further revised downward another 16,000 to 172,000. July took a big hit and was revised down 58,000 from 162,000 to 104,000. This casts doubt on the August number.

Seasonally adjusted total nonfarm jobs were 136.133 million. Total private were 114.302 million.

Unadjusted, total nonfarm jobs increased 378,000 to 135.961 million. Private sector jobs were up 154,000 to 115.218 million. If last year is any guide, next month the private sector should lose about 350,000 and government (i.e. public education) should gain about 950,000. The business survey is a month behind the household survey in showing the effects of the beginning of the school year.

In terms of job creation, I find the unadjusted numbers more informative as to the direction and condition of the economy.

Unadjusted, construction was up 26,000 to 6.085 million. Manufacturing rose 52,000 to 12.063 million. For all the talk of fracking, jobs in oil and gas extraction rose by only 1,700 in August (199,100) and only 8,500 since January. Fracking may be having a big impact on the environment but it has not had much of one on jobs.

Among our economy's shit jobs, retail trade grew by 54,800 to 15.2483 million. Interestingly, the motion picture and sound recording industry lost 29,400 to 369,100 for whatever reason, perhaps the lack of any or few big summer blockblusters. Financial activities also dropped 20,000 to 7.952 million. Professional and business services gained 51,000 to 18.743 million, of which temp jobs grew by 64,700 to 2.7497 million. This is an increase year over year of 185,300 and is slightly ahead of the August 2006 number of 2.727 million. Healthcare jobs increased by 36,700, most of which were in ambulatory healthcare services (33,900). Leisure and hospitality lost 22,000 to 14.833 million, of which arts, entertainment and recreation lost 43,700 to 2.2901 million and food services and drinking places gained 25,000 to 10.5684 million.

Hours and Earnings

Average weekly hours for all employees on private nonfarm payrolls increased a tenth of an hour to 34.5 hours (the same as June). Average hourly earnings increased 5 cents to $24.05/hour and average weekly earnings grew $4.13 to $829.73.

Average weekly hours for production and nonsupervisory (blue collar and clerical) personnel were unchanged at 33.6 hours. Average hourly earnings increased 4 cents to $20.20 and average weekly earnings increased $1.34 to $678.72. In retail trade, average earnings increased by only one cent to $14.00/hour.

As I mentioned last month, since four-fifths of workers are in production and nonsupervisory jobs. It is easy to see that most of the average increase in earnings for all workers actually comes from increases in the top fifth of workers. That is while the bottom four-fifths had an average weekly increase in earnings of $1.34, the top fifth must be averaging an increase of $19.26/week for things to balance out, if you can call such unequal increases a balance.

Household data (Employment/unemployment)
Statistical significance: +/ - 400,000
The A tables: http://www.bls.gov/cps/cpsatabs.htm
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part time workers
A 9 Full time workers
A 12 Duration of unemployment
A 15 U 6 un- and under employment
A 16 Persons not in labor force

Establishment date (jobs)
Statistical significance: +/ - 100,000
The B tables: http://www.bls.gov/ces/cesbtabs.htm
B 1 Total jobs and jobs by industry/type
B 2 Weekly hours, all employees
B 3 Hourly and weekly earnings, all employees
B 6 Weekly hours, blue collar
B 7 Hourly and weekly earnings, blue collar

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