Posted 07/06/2012 08:51 AM ET
Nonfarm payrolls rose by just 80,000 in June, slightly worse than expected and the third straight month of sub-100,000 job growth. The jobless rate held at 8.2%. The employment report was disappointing. Here are 10 reasons why the jobs market is even worse than the headline figures.
1. Unemployment has topped 8% for 41 straight months. Last time above 8% - December 1983.
2. The jobless rate actually makes the labor market look better than it actually is. The rate only counts people who want a job but don't have one. But the labor force participation rate was 63.8% in June, just above near modern-era lows. (It was 66.2% in January 2008 and 67.3% in April 2000). Otherwise, unemployment would be around 11%.
3. The employment-to-population ratio for those aged 25-54 dipped to 75.6% in June, down sharply from 80% in January 2008. Many economists left and right view the core employment ratio as one of the cleanest views of the labor market, because it includes those who have stopped looking for work while excluding the bulge in retirees and young adults in school.
4. Chronic unemployment. The average length of unemployment rose to 39.9 weeks in June, close to recent peak. It was 17.4 weeks at the January 2008 peak and 23.9 weeks in June 2009, when the recession officially ended. Long-term joblessness is particularly bad because skills erode or become obsolete, leading to permanent losses in income.
5. The U.S. added 225,000 jobs in the second quarter vs. 677,000 in Q1. That was the smallest quarterly gain since Q1 2010 — excluding the Q3 2010 post-Census decline. June's gain of 80,000 is not enough to absorb new workers to prevent the unemployment rate from rising over the long term.
6. Nonfarm payrolls are 4.935 million, or 3.6%, below their January 2008 peak.
7. This is already the longest jobs recession since the Great Depression at 53 months. Payrolls aren't on track to reach the old highs until June 2015, assuming the sluggish economic expansion lasts that long.
8. Private sector "doing fine"? Private-sector employment still down 3.9%, or 4.502 million. Government jobs overall are down 1.9%, with federal jobs (ex post office) up 10.7%.
9. Entrepreneurial activity fading. The number of startup firms has crashed from pre-recession highs, still near levels previously seen in the early 1980s, when the number of establishments was far lower. Establishments less than a year old, including those belonging to the same firm, totaled 556,553 in 2010, according to the latest Commerce Department data. That's down 26% from the peak of 747,278 in 2006. Meanwhile, the number of employees at startups has plunged, with a greater share of new firms with no employees — one-man shops. Very small startups are less likely to invest or to grow, a bad sign for future hiring.
10. Gross hiring. The monthly payrolls report refers to net job gains — hiring minus the number of people who were laid off or quit. Layoffs are near decade lows. Actual gross hiring fell to 4.175 million in April, the most recent month in Labor's JOLTS survey. That's the lowest since last July. Weak gross hiring reflects companies remaining cautious. It also makes it harder for the unemployed to find work, which is probably one reason why unemployment duration is so high.
1. Unemployment has topped 8% for 41 straight months. Last time above 8% - December 1983.
2. The jobless rate actually makes the labor market look better than it actually is. The rate only counts people who want a job but don't have one. But the labor force participation rate was 63.8% in June, just above near modern-era lows. (It was 66.2% in January 2008 and 67.3% in April 2000). Otherwise, unemployment would be around 11%.
3. The employment-to-population ratio for those aged 25-54 dipped to 75.6% in June, down sharply from 80% in January 2008. Many economists left and right view the core employment ratio as one of the cleanest views of the labor market, because it includes those who have stopped looking for work while excluding the bulge in retirees and young adults in school.
4. Chronic unemployment. The average length of unemployment rose to 39.9 weeks in June, close to recent peak. It was 17.4 weeks at the January 2008 peak and 23.9 weeks in June 2009, when the recession officially ended. Long-term joblessness is particularly bad because skills erode or become obsolete, leading to permanent losses in income.
5. The U.S. added 225,000 jobs in the second quarter vs. 677,000 in Q1. That was the smallest quarterly gain since Q1 2010 — excluding the Q3 2010 post-Census decline. June's gain of 80,000 is not enough to absorb new workers to prevent the unemployment rate from rising over the long term.
6. Nonfarm payrolls are 4.935 million, or 3.6%, below their January 2008 peak.
7. This is already the longest jobs recession since the Great Depression at 53 months. Payrolls aren't on track to reach the old highs until June 2015, assuming the sluggish economic expansion lasts that long.
8. Private sector "doing fine"? Private-sector employment still down 3.9%, or 4.502 million. Government jobs overall are down 1.9%, with federal jobs (ex post office) up 10.7%.
9. Entrepreneurial activity fading. The number of startup firms has crashed from pre-recession highs, still near levels previously seen in the early 1980s, when the number of establishments was far lower. Establishments less than a year old, including those belonging to the same firm, totaled 556,553 in 2010, according to the latest Commerce Department data. That's down 26% from the peak of 747,278 in 2006. Meanwhile, the number of employees at startups has plunged, with a greater share of new firms with no employees — one-man shops. Very small startups are less likely to invest or to grow, a bad sign for future hiring.
10. Gross hiring. The monthly payrolls report refers to net job gains — hiring minus the number of people who were laid off or quit. Layoffs are near decade lows. Actual gross hiring fell to 4.175 million in April, the most recent month in Labor's JOLTS survey. That's the lowest since last July. Weak gross hiring reflects companies remaining cautious. It also makes it harder for the unemployed to find work, which is probably one reason why unemployment duration is so high.
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