In today’s jobs report, we’re told 169,000 jobs were added in the U.S. jobs market in August. (Source: Bureau of Labor Statistics, September 6, 2013.) Aside from the fact we need a minimum of 200,000 jobs a month to see a substantial change in the U.S. jobs market, the details in this morning’s report are particularly weak and concerning.
Actually, let’s start with the previous month’s downward revision in employment. The revised numbers that came out this morning show the U.S. economy added only 104,000 new jobs in July, not the 162,000 we were originally told were created in that month.
Moving to August, this morning’s jobs market report shows the only growth in jobs is in the low-wage-paying sectors. Add up all the new retail, health care, business services, and hospitality jobs, and 71% of all jobs created in August were in the low-paying sectors!
The underemployment rate, which includes those people who have given up looking for work or who have part-time jobs because they can’t get full-time jobs, still sits near 14%! (The politicians will never talk about the underemployment rate—what economists like me consider the real employment rate—because this number shows the jobs market is not improving.)
So what type of growth did we see in August in jobs in the manufacturing, construction, and other sectors that pay a higher salary? Sadly, jobs growth in those sectors was dismal. The manufacturing sector of the U.S. economy only created 19,000 jobs in August—after a decline of 10,000 in July! Sectors like construction, mining and logging, transportation and warehousing, and financial activities showed no change in jobs growth!
To the optimists, let’s give you the benefit of the doubt and say this month’s jobs market report was a “blip” in growth. Even if we do put it aside and look at the bigger picture, the long-term trend in the jobs market is cruel!
Just look at the chart below that we’ve created exclusively for our Profit Confidential readers. The chart shows the growth rates in different sectors of the jobs market from June 2009 to July of 2013—and it’s not pretty.
From the chart, you can clearly see how jobs growth in sectors like manufacturing, construction, and financial activities are lagging. But sectors such as professional and business services are rising. Yes, business for temp agencies is booming!
Other troubling trends in the jobs market: the labor force participation rate is declining, real wages have been declining, and the long-term unemployed continue to make up a huge percentage of those who are jobless.
Whoever said the U.S. economy is improving…they’re wrong.