The number of jobs in the US shrinks yet again
From today’s BLS release, as reported by the AP:
Layoffs Rose Sharply Last Month, Report Says
WASHINGTON (AP) — The civilian unemployment rate improved marginally last month — sliding down to 6.1 percent — as companies slashed payrolls by 93,000. Friday’s report sent mixed signals about the nation’s overall economic health.
August was the seventh consecutive month of cuts in payrolls, a survey released by the Labor Department showed, indicating continuing weakness in the job market. But the overall seasonally adjusted unemployment rate fell from 6.2 to 6.1 percent of the labor force, as reflected by a broader survey of U.S. households.
It’s interesting that the divergence between the payroll numbers (falling for 7 months in a row now) and the unemployment rate (roughly constant for the past 5 months) continues with this report.
Since the unemployment RATE is derived by taking the number of people who say they’re unemployed and dividing it by the total number of people in the workforce, there’s one obvious explanation for this divergence: while fewer people are working, fewer people who aren’t working are calling themselves unemployed. In other words, every month more and more non-working people tell the BLS that they’re not actively looking for work.
I don’t think that such a continual fall in the number of non-working people actually looking for work has a precedent in recent US history. Economists call this the “discouraged worker effect.” But one interesting question is whether there could be another explanation for this, other than the (probably sufficient) possibility that people won’t bother looking for work until our current pathetic economic policies are changed.