Thoughts on the September Employment Report
This morning, the Bureau of Labor Statistics (“BLS”) released the jobs report (more formally known as the Employment Situation) for September 2010. The headline numbers were a loss of 95,000 nonfarm payroll jobs and an unemployment rate of 9.6%. This was the 17th consecutive month that the unemployment rate exceeded 9.0%; the administration sold the $787 billion stimulus package as a way to keep the unemployment rate from exceeding 8.0%. By this measure, the stimulus was a dismal failure. While the number of private-sector jobs increased by 64,000, the number of government jobs fell by 159,000, of which 77,000 were temporary Census workers and the remaining 82,000 were permanent government works; 76,000 state and local government employees lost their jobs, as states such as CA and IL continue to struggle with budget woes.
As with the August jobs report, perhaps the most troubling number in the September report is one that largely went unreported. U6, the broadest measure of unemployment reported by the BLS, which includes discouraged workers and part-time workers who would have preferred to work full-time, rose from 16.7% to 17.1%. This translates into 26.4 million workers out of a labor force of 154 million who are unemployed or underemployed. In August, there were 9.47 million workers who reported working part-time for economic reasons, up 612,000 from 8.86 million number for July.
The September report also includes information on annual benchmarking where the survey estimates are benchmarked to more comprehensive counts from state unemployment insurance tax records filed by nearly all employers. Preliminary revisions indicate a downward adjustment of 366,000 jobs. In other words, BLS has been telling us that there were 366,000 more jobs than actually existed. Moreover, all of these phantom jobs were in the private-sector job counts.
This job market continues to discriminate against men and minorities. Among men, the unemployment rate remained at 9.8% while, among Blacks, it declined from 16.3% to 16.1%. In contrast, the September unemployment rate among women was only 8.0% and, among Whites, was only 8.7%. Among teenagers age 16-19, a group that is usually the first to lose their jobs during a recession, the unemployment rate fell from 26.3% to 26.0%.
Clearly, education plays a major role in those who do and those who do not have jobs. The September unemployment rate for those with a college degree was only 4.4%; for those with some college or an associate degree was 9.1%; for those with a high school diploma but no college was 10.0%; and for those with less than a high school diploma was 15.4%.
There were a few bright spots in the employment report. The average duration of unemployment declined from 34.2 weeks to 33.6 weeks and the median duration declined from 22.2 to 19.9 weeks. The number of unemployed declined by 93,000, and the number of chronic unemployed—those out of work more than 26 weeks, declined by 130,000 to 6.12 million. However, it may simply be that these workers gave up hope and exited the labor force. A total of 175,000 workers existed the labor force in September. This is a bad signal because workers typically re-enter the labor force when labor-market conditions are improving.
