20% Unemployment . . . in the United States?!!!
Yesterday, the Bureau of Labor Statistics released its monthly employment report for August. The surprising headline number was zero, as is zero new payroll jobs. Not positive. Not negative. Exactly zero. Difficult to believe, eh? No worries: the BLS revised downward the reported payroll jobs numbers for June and July by about 50,000, so next month, expect the August number to be revised into a negative loss in the tens of thousands. Thus, a “double-dip” recession almost surely begins, as we already have seen quarterly GDP growth slowing to almost zero, and also seeing downward revisions each month.
As if this isn’t bad enough, looking deeper at the BS in the BLS numbers, we find that BLS staff included in the Aug. payroll numbers 87,000 workers “invented” by the BLS “birth-death” model, which is designed to account for job changes at firms not covered by the establishment survey. Thus far this year, the “birth-death” model has added 800,000 “new jobs” to the payroll statistics that almost certainly don’t really exist. During each of the past three years, the BLS had had to “walk back” these monthly estimates in January, when it benchmarks the establishment data with actual unemployment insurance records. Of course, it doesn’t consider these as “lost” jobs, nor does it go back and revise the monthly numbers. So don’t put too much credence in the meager employment “growth” reported since 2009; it’s all smoke and mirrors, or, as I like to say, BLS “BS”.
More bad news is found in Table A-8 of the BLS report, which provides details on part-time vs. full-time employment. The number of workers working part time for economic reasons, i.e., who wanted a full-time job but couldn’t find one, rose by a staggering 430,000. In other words, we actually lost 430,000 full-time jobs, which were replaced by part-time jobs, in order to keep the aggregate payroll number at “zero.”
From the household survey, we actually got some positive news: employment increased by 331,000 as 165,000 discouraged workers came back into the labor force and, with population growth, the labor force increased by 366,000. Many economists, including me, think that the household survey gives a better idea of when the jobs market changes direction, so this is indeed a “green shoot” in an otherwise very brown landscape.
The unemployment rate remained unchanged at 9.1% as measured by the U-3 metric, which only includes workers who actively looked for a new job during the previous four weeks. The broader U-6 measure, which includes discouraged workers and part-timers who wanted full-time work, rose from 16.1% to 16.2%. If we add in the 6 million discouraged workers that the BLS does not consider part of the labor force, we arrive at a unemployment rate of more than 20%; in other words, one in five U.S. workers who wants a full-time job can’t find one.
