The good news reported by the Bureau of Labor Statistics on Friday, September 6, is that the unemployment rate fell to 7.3% in August. While that is the lowest number in five years, negative factors contribute to the reasons behind the drop.
Negative factors lowering unemployment
When you take a closer look at the statistics behind the 7.3% unemployment rate we find 169,000 jobs added in August which was fewer than expected. Wages and salaries went down .3% which is due partly to the shift from full time work to part time work many have settled for. People are being hired back but at lower wages and often for less hours. In fact, 77% of new jobs were for 35 hours a week or less. The participation rate is the lowest rate in 35 years at 63.2%. The number of people employed dropped by around 115,000. The reason the rate fell is that the overall labor force dropped by 312,000. This shows people are totally dropping out of the workforce. Some are retiring, but many discouraged job seekers have given up looking for work.
What counts as unemployed?
The Labor Department's website makes it clear who is counted as unemployed when it comes to the nation's unemployment rate. The only people who are counted as unemployed must meet the following criteria:
- Do not have a job
- Have actively looked for work in the prior 4 weeks
- Are currently available for work
Those who don't have a job and are not looking for one are not considered part of the labor force and are not reflected in the unemployment rate. This includes people who have retired, are going to school, and those who have given up looking for work all together.
At the beginning of September we celebrated Labor Day, but only one third of teenagers (32%) held jobs. Compare this to the fact that 52% of teens had jobs in 1999 and it helps to create a clearer picture. Add this to the 90 million people who are out of work plus the explosion of part time workers who really want to be working full-time, it paints a different picture than we see in many headlines.