September 7 2010
Labor Day Economics
The job reports for August are out. Oh no.
Yesterday we had the day off to celebrate the American worker and the contributions working people have made to the success of our country. But it is sad to celebrate "labor" at a time when so many Americans are without work or are working in jobs they are overqualified for.
The Bureau of Labor Statistics released the August numbers Friday, and they are discouraging. Although the unemployment rate changed little (from 9.4% in July to 9.6% in August), one important change in August was the surge in underemployment rates. From the report summary:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 331,000 over the month to 8.9 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
That means that the "underemployment rate" is around 16.7%. Another issue the overall unemployment statistic of 9.6% does not take into consideration is the change (in this case an increase) in discouraged workers. What is a discouraged worker? There is a group of people "marginally attached" to unemployment figures (in August the group numbered 2.4 million), but not counted in the whole because they have not actively sought out work in the past 4 weeks:
Among the marginally attached, there were 1.1 million discouraged workers in August, an increase of 352,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.
This is bad Labor Day news. On top of all that, a recent Pew Center survey reports that 54% of people reemployed after the recession are working in jobs they are overqualified for. Clearly, this Labor Day many Americans are unhappy with employment in the United States.
These aren't just statistics; these are people. The solution isn't in more bad government policies and programs - the answer is in the private sector. The private sector is the only place where jobs were actually created in August: 67,000 jobs. And that number could have been much higher had business leaders had more certainty about how to best use their resources. It's time for the government to step back and remember the limits of their role as put forth in the Constitution.