Last Updated: 9:08 a.m.
The U.S. economy added 163,000 jobs in July, better than expected, but the unemployment rate rose back to at 8.3 percent, because job creation hasn’t been robust enough to do more than merely keep up with the natural growth of the work force.
Some 12.8 million people remain unemployed, roughly the same number for the past half year. The economy must add at least 150,000 jobs a month just to stay even with natural growth. The monthly average job creation since January has been just that: 151,000. June’s numbers were revised downward, to 64,000 jobs (from 80,000), and May’s were revised upward by 10,000, to 87,000.
The New York Times points to a startling fact: “The economy now produces as many goods and services — more, in fact — than it did before the downturn officially began in December 2007. But it does so with almost five million fewer jobs.”
The labor force participation rate, at 63.7 percent, and the employment to population ratio, at 58.4 percent barely changed, which means that the workforce is not growing significantly, nor encouraging workers who’ve dropped out of it to return. Those are underlying signs that the foundations of the economy have yet to strengthen. “This is the weakest recovery we’ve ever seen, weaker even that the recovery during the Great Depression,” Neal Soss, chief economist at Credit Suisse, told the Times. “If you’re not scared by that then you’re not paying attention.”
The Obama administration should be scared, too: no president has been reelected since the Great Depression with unemployment above 7.2 percent. The last president to be reelected with the unemployment rate at that level was Ronald Reagan, who won in landslide in 1984. On the other hand, Franklin Roosevelt won re-election in 1936, when the unemployment rate was 16.6 percent. He won again in 1940, when the rate was still a Flagler County-like 14.6 percent. Nate Silver, the FiveThirtyEigh forecaster, still gives Obama a 70 percent chance of winning in November.
The so-called U-6 measure of unemployment is the more accurate way of gauging the labor force because it includes discouraged workers and those who are working part-time involuntarily (because they can’t find full-time work or have had their hours cut back). That measure shows yet another increase, to 15 percent, the highest level since July 2011. It includes 8.2 million involuntary part-time workers and 2.5 million workers who were not counted as unemployed, because they’d quit looking.
Some highlights from the unemployment report:
Sectors that added jobs include professional and business services (49,000), tourism and leisure services (29,000), manufacturing (25,000) and health care (12,000). Losers included utilities (-8,000), while other major industries, including mining and logging, construction, retail trade, transportation and warehousing, financial activities, and government, showed little or no change over the month.
The average workweek for all employees on private payrolls was unchanged at 34.5 hours in July. Both the manufacturing workweek, at 40.7 hours, and factory overtime, at 3.2 hours, were unchanged.
Average hourly earnings for all employees on private payrolls edged up by 2 cents to $23.52. Over the year, average hourly earnings rose by 1.7 percent, exactly the rate of inflation, which means wage growth is not enough to improve workers’ standard of living. In July, average hourly earnings of private-sector production and nonsupervisory employees increased by 2 cents to $19.77.