The headline numbers in the jobs report released last Thursday were 169,000 and 7.3% (new jobs and U3 unemployment rate). Tepid job growth, but hey, the unemployment rate dropped a tenth of a percent, so all in all not bad, right? WRONG! Here are the miserable bullets of the important data behind the big numbers:
- July’s jobs were revised down by a staggering 40%
- No, zip, nada, zilch, zero new construction jobs in August
- Unemployment rate dropped because 312,000 ran out of benefits
- 542,000 full-time private sector jobs were wiped out
- 156,000 new part-time jobs were created
- Workforce labor participation rate fell to 35 year low
How bad is this? If not for robust agricultural hiring (seasonal) and 342,000 brand new government jobs, the report would have been negative and everyone would be talking recession. That’s how bad.
I hate to pile on, but I remain very worried about poor job mobility numbers, and the ones shaping up now are terrible. The churn of jobs is vital to recovery, and the vaunted mobility of the American worker has historically supported this. The mortgage debacle hamstrung mobility by nailing workers down geographically to underwater homes when they normally would have gotten out of Dodge. Poor job growth made worse by the poor quality of jobs created has served to keep fearful workers stuck in place. No mobility means no churn, no churn means declining opportunity, declining opportunity means new entrants run into a brick wall and miserable workers stay put and fall further into disengagement. Prior to the Great Recession we averaged 1 million “quits” per month as workers moved to perceived greener pastures. These quits have come to a standstill, which is the opposite of what should be happening in a recovery.
Still not convinced? Try this on for size: U.S. job growth in 2012 averaged 184,000 per month. It was only 160,000 per month for the first six of this year, and the average over the last three is now down to 148,000 per month. You don’t need to be an MIT grad to see that the vector of this curve is negative. I feel a recession coming on.
(Hat tips to Neil Irwin at WaPo, John Lott at Fox News and Professor Michael Hicks of Ball State University)