Jared Bernstein has motivated me to dust off one of my favorite charts:
The unemployment rate, calculated from the survey of households, was unchanged at 4.6%, but this was due not to job growth in that concurrent survey. In fact, employment fell 316,000 last month according to the more volatile (and thus less reliable on a monthly basis) household survey. Averaging over the year, that survey shows a monthly decline in jobs of 16,500 so far in 2007. The reason August’s unemployment rate was unchanged was due to a large monthly fall off – down 340,000 – in the labor force (those who leave the labor force are not counted among the unemployed). In other words, the unemployment rate was unchanged due to fewer job seekers, not more jobs. Had those who left the labor force instead been counted as unemployed, the rate would have jumped to 4.85%. (The BLS noted that part of the decline in the labor force was driven by teenagers going back to school, but the adult male labor force, which had been growing in general, also fell by over 100,000.)
The unemployment rate was 4.5% as of December 2006 and is 4.6% now. But this fact masks the decline in the employment to population ratio (EP) as the labor force participation (LFP) has declined since December 2006. When the employment to population ratio reached 63.4% in December 2006, there may have been a legitimate debate whether we were near full employment. OK, I was arguing (still am) that we should be shooting for an employment to population ratio closer to 64%. But a few other economist bloggers had a different view. But I trust these other economist bloggers would argue that an employment to population ratio at 62.8% is disappointing.