For the second time in monthly jobs report history we have created no new jobs. The last time we created no jobs in a month was 1945. We saw downward revisions to the June and July 2011 numbers as well; erasing 56,000 previously reported job gains. Local government employment continued to fall, losing 20,000 jobs in August. Of the local job losses 13,700 were in education. We have now lost 550,000 local public sector jobs over the last 3 years. The broad U-6 measure of unemployment rose to 16.2% in August. This measure includes people who have stopped looking and who are involuntarily part time.
We continue to see consistent and large job losses at the local government level. We have now seen this for many, many months. It is particularly alarming to see cuts remain concentrated among those who work in public schools. We know this is not beneficial for the 85% of American students who go to public schools. In an increasingly competitive global economy, large and continuous disinvestment in basic public education is highly problematic. It would be hard to imagine a worse way to cut public spending and service provision.
Productivity has been strong during the great recession and "recovery" over the last 3 years. Productivity gains have been significant and have gone, nearly entirely, to profits. The most recent data, 2Q2011, productivity declines are not shocking in the context of recent growth. We are seeing compensation rise more than hourly output. The rapid recent increases in consumer prices, especially food and energy, suggest that some increase in hourly compensation was overdue and necessary. It remains true that productivity has surged over the last few years and nearly all the gains have gone to private sector profitability. Compensation has been flat and unit labor costs, until the latest data, were falling as productivity increased much faster than wages.
Summer 2011 saw the highest youth unemployment rate ever reported in the over 6 decades of numbers that we have. The BLS counts people 16-24 years old as youth. The April to July 2011 youth employment to population ratio was under 50%, 48.8%. We saw 18% youth unemployment this summer with 30% for African American youth. This bodes poorly for the future and highlights the disproportionate negative effect that the recent economy has exerted the young.
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