Friday’s jobs report was bad. Forget the unemployment rate falling to 7.3 percent in August from 7.4 percent in July. That was mostly the result of 312,000 people dropping out of the labor force. Labor force participation is its lowest since 1978, and while economists are divided on why it is happening — baby boomers retiring, people going on disability or staying in school, discourged workers who have stopped looking for a job — it is almost certainly not a healthy sign. There aren’t enough job openings. Most boomers are horribly prepared for retirement. This is a metric that almost certainly points to a lack of good jobs and slower growth.
The 169,000 jobs added must be measured against the 125,000 or so needed just to keep up with the natural growth in the labor force. Net new job growth has slowed since earlier in the year. Slipped into Friday’s report were revisions cutting the number of jobs added in June and July. Government jobs overall continue to be slashed, a stark contrast to other recoveries and a huge headwind for this one. Most jobs are being created in low-wage sectors. Part-time work is rising (and no, not mostly because of Obamacare).
The “jobs gap,” what is needed to get us back to 2008 employment levels, continues to be disastrous. See for yourself in the Hamilton Project’s calculator. There’s no end in sight to the jobs crisis.
In response, Washington is doing worse than nothing. The political system is broken, so not only will there be no stimulus to boost demand and provide jobs, the mindless sequester cutting goes on. The Federal Reserve has given few signals that it will change its mind about “tapering” off its bond buying program. If that happens, it’s going to be a very interesting fall.
And Don’t Miss: How the cult of shareholder value wrecked American business | Washington Post
Today’s Econ Haiku:
It’s been five long years
Since Lehman Brothers collapsed
Short attention span