Today’s big jobs headline is that the unemployment rate for July dropped to 9.5%, which on the surface looks like good news, but let me look below the surface to show that this lower rate has little to do with more jobs being created. (emphasis mine)
Unemployment rate dips as more workers leave labor force
Employment-seekers decline by 652,000 June, which may reflect people giving up on job-hunting and reluctance to hire. Overall, the jobless rate falls to 9.5% from 9.7%, the Labor Department reports.
Private employers added a smaller-than-expected 83,000 jobs in June, but the unemployment rate edged down to 9.5% as many workers dropped out of a labor market that remains very sluggish.
The Labor Department reported Friday that total payroll employment, including government workers, was down 125,000 in June, reflecting the loss of 225,000 census workers who finished their assignments.
Job gains last month were largely in low-paying industries — leisure and hospitality, and the temporary-help industry. Manufacturing payrolls grew by 9,000, but that was much smaller than the average of 25,400 in the prior five months. And the construction industry shed another 22,000 jobs in June.
From those four small paragraphs comes a great deal of information showing that the job market is in worse shape than the unemployment rate indicates and here’s why:
So why would 652,000 drop out of the workforce? It’s likely a result that jobs are very difficult to find! The unemployed collecting benefits can’t stop looking for work legally, so they considered part of the workforce. As a result it’s very possible that those who have exhausted benefits are falling off the workforce total since they can’t find work!
· There are many numbers floating around about the total number of unemployment benefit exhaustees, but I’ll take a middle number of 2 million to illustrate a point. Is it coincidental that the workforce dropouts spiked around the same time that many 99ers dropped out of the benefit pool? I doubt it. If people couldn’t find work after 99 weeks, or whatever was the maximum , how would they find work after benefits ended? It shows that there is a real problem with long-term unemployment that Congress seems to be ignoring at this juncture.
· Next, employers created only 83,000 jobs. Those are private industry jobs that are the backbone of the economy. It’s important to remember and very seldom included in media reports, that it takes upwards of 150,000 newly created jobs to simply keep even with population growth. While the creation of 83,000 jobs is better than losing jobs, those created jobs were not enough to keep up with job population growth.
Job gains last month were largely in low-paying industries — Those numbers give the jobs report an even less favorable appearance. June is the start of the major tourist season throughout the US, so you would expect some growth in tourism jobs, but when 22,000 higher paying construction jobs are replaced by lower paying leisure and hospitality, it shows that the economy, especially the job market, is not on sound footing.
· Temporary employment added 21,000 to the total jobs created and “within leisure and hospitality, employment rose over the month by28,000 in amusements, gambling, and recreation.” 83,000 private industry jobs were created, but the majority of those jobs were either temporary or lower paying leisure industry jobs.
· How about the long-term unemployed, those that have been out of work for more than six months?
Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks
According to the BLS, there are 6.751 million workers who have been unemployed for more than 26 weeks and still want a job. This is a record 4.39% of the civilian workforce. (note: records started in 1948). It does appear the increases are slowing … perhaps because people are giving up.
While I don’t want to slam this report too hard because some jobs were created and any job creation is good, but if job creation continues at this slow a pace, it will be any years before the 7.5 million who have lost their job in this recession find work again. In fact if 100,000 jobs are created each month, it will take another 75 months (6 years and 3 months) to simply reemploy those that have lost work during this jobs recession and that doesn’t include the 150,000 jobs a month needed each month for new workforce entrants.
One encouraging sign is that the media is starting to see that the jobs picture is not brightening as quickly as many had said it would and they are starting to report the job numbers more honestly.
This report shows the continued need for extending unemployment benefits and I hope Congress is getting the message over its July 4th holiday break. Make sure that you continue to let your congressional representatives know that jobs are not being created in the numbers necessary to end unemployment benefits for millions.
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Congress.org has a great media contact list:http://www.congress.org/congressorg/dbq/media/
Another media contact list is located at:http://www.democraticunderground.com/discuss/duboard.php?az=view_oet&address=358×1903
Keeping the Tier 5 and extended unemployment issues alive is going to be up to you, so be sure to contact your congressional representatives as often as you can. You need to continue to pressure Congress to act responsibly and to extend benefits for those unable to find work. Send your representative a fax using FaxZero.com. As has been mentioned in the comments section, you can send up to two free faxes a day.
Here’s a great site where you can find both state and federal contact information: http://conservativeusa.org/mega-cong.htm
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You can also follow numerous unemployment issues on Facebook. My profile is located at Rochester Unemployment-Examiner (dash between Unemployment and Examiner). There are some great groups that support the long term unemployed, so check it out.