–August Payrolls +96,000; Unemployment Rate 8.111%

By Denny Gulino

WASHINGTON (MNI) – Looking deep into the disappointing August jobs
report, there was a rare sign of life in an obscure measure within a
labor force that has hit a three-decade low participation rate, an
upward spike among those who “want a job” but aren’t yet looking for
one.

The Bureau of Labor Statistics Friday reported August payrolls up
only 96,000, well below expectations for 129,000, with hopes for more
having been lifted by Thursday’s ADP measure of 201,000 in the private
sector. Without seasonal adjustment, payrolls actually grew by 252,000
in the month.

The fact the payrolls number was positive was doubtless scant
encouragement at the White House, looking for some new signs of strength
as the election approaches. The improvement in the unemployment rate,
back to its low of the year of 8.1%, again had nothing to do with hiring
momentum.

The rate improved only because “all of the population growth and
the change in the labor force went into the category of ‘not in the
labor force,'” Dori Allard, chief of the BLS Division of Labor Force
Statistics, told MNI. “The employment rate went down because the labor
force went down.”

The category of ‘not in the labor force’ jumped by 581,000,
rivaling the April expansion of 522,000 that triggered market murmurs
about political manipulation of the unemployment rate.

In May, that category declined again and may well in September, yet
the fact remains that whatever influence the financial crisis had to
accelerate the lifelessness of labor force expansion, it’s continuing.
In fact, people have been exiting the labor force for a lot longer.

The labor force participation rate in August dropped by 0.2 points
to 63.5%, the lowest since September 1981, Allard said. The remarkable
paring of the portion of the population working has been blamed on a
variety of long-term trends, particularly the aging of the labor force
overall. “People who are older tend to have lower force participation
rates,” she said.

The crisis may also have increased those returning to school to
upgrade skills and some analysts have blamed what had been particularly
extended jobless benefits for dampening the urge to get back to work.
With those unemployed six months or longer still at 5 million in August,
40% of all the unemployed, relatives and friends may be prone to
discouragement about job prospects to a greater degree than normal.

Within that category of those not in the labor force one measure
showed a sharp and unusual increase, she said. Those not included in the
labor force who answer a screening question in the monthly survey saying
they “want a job,” jumped 403,000, without seasonal adjustment.

If they want a job, why aren’t they included in the labor force?
“They haven’t looked” in the past year, Allard answered. “The majority
of them aren’t even included in the ‘marginally attached to the labor
force’ measure either, because they haven’t looked in the last year.”

The BLS measure of those who want a job but aren’t looking “is
somewhat volatile,” she continued. “There was a movement downward last
year in May of 302,000, and a movement upward in June of 315,000.”

Now the numbers who say they want a job has grown some more,
suggesting they may finally start looking again soon. “It’s August, and
sometimes people take vacations in August and sometimes who are not
employed, people who are employed, people who are looking take vacations
so that could be complicating things a bit.”

The August decline in manufacturing, of 14,000 after adjustment, is
again a number clouded by the changing patterns of retooling layoffs in
the auto industry, she said. In July manufacturing rose 14,000 because
“fewer people had closed for retooling” and this month “fewer workers
were recalled, so some of that is probably due to a seasonal change.”

As the new pattern establishes itself, it will be captured in
future seasonal adjustment factors, but for now, “we see a difference
every year in how they’re doing it.”

Likewise, she said, the 9,000 increase in utility workers was
simply the return of 8,500 Consolidated Edison workers who had been
locked out.

The unemployment rate in August of 8.111% compared to the July rate
barely into the 8.3 range, at 8.253%.

Chairman of the White House Council of Economic Advisors Alan
Krueger, said the employment report “provides further evidence that the
U.S. economy is continuing to recover from the worst downturn since the
Great Depression.” A Republican Party spokesman said the report shows
the string of months with unemployment above 8% has now stretched to 43.

** MNI Washington Bureau: 202-371-2121 **

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