So the headline number on unemployment is 9.7%. That alone might be enough to send people into the last weekend of summer with the sense that the economy has a long winter ahead of it. But ugly as that 0.3 percentage point jump in the closely watched number is, a look behind that number is uglier still.
- The decline in jobs wasn't as bad as the leap in the unemployment rate suggested-but that's not good news. Uncle Sam's payroll survey showed 216,000 jobs lost, which University of California, Berkeley's Brad DeLong thinks wasn't too terrible. There are two problems with this, however.
- The first is, the headline unemployment rate leaped because many people who had been too discouraged to look for work came back into the labor force in August--drawn, no doubt, by the happier economic news of the summer -- and found there still wasn't any work for them.
- The second problem is, that 216,000 jobs lost per month is roughly the run rate of our two most recent recessions, as Arpitha Bykere, senior analyst of Nouriel Roubini's RGE Monitor, points out. The sole reason the phrase "only 216,000 jobs lost" doesn't sound deluded is that we were losing 600,000 jobs a month after Lehman collapsed a year ago. But when you compare these job-loss numbers to those in previous downturns, it looks like we're still in the middle of our labor recession.
- The broadest figure for unemployment took a big jump from 16.3% to 16.8%. This is the one that includes discouraged workers and those working part time because they couldn't find full time work. Atlanta Fed president Dennis Lockhart thinks this is the real unemployment number.
- Hours worked went down. Economist Clair Brown of U.C. Berkeley points out that today's unemployment numbers are artificially boosted by the number of people working reduced hours and sharing jobs -- a recession-fighting tactic that American companies haven't used for decades. You can see the effect in the sharp drop in hours worked, particularly in the good producing sector, where they've gone from over 40 a week a year ago to just over 33 in August. When the recovery eventually comes, employers can just boost people's hours at first; they don't have to re-hire.
Any silver lining? Well, Clair Brown says the "incredibly resilient" U.S. labor market will adapt. Eventually. But not for many Labor Days to come.
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