With Labor Day coming on Monday, perhaps it’s appropriate to discuss the employment report announced by the U.S. Bureau of Labor Statistics (BLS) yesterday (Friday, September 4, 2020). Part of the data release was very encouraging. However, part of the data release was not nearly as encouraging.
First, let’s consider some of the good news. The U.S. economy added an estimated 1.4 million jobs in August 2020. Let’s hope that the economy keeps adding many jobs as it tries to recover from the COVID-19 coronavirus collapse. The creation of jobs helped to drive the estimated U3 unemployment rate below ten per cent (and below 8.5 per cent).
Now, consider some of the not so good news. One of the factors preventing the unemployment rate from being higher is that many have stopped seeking employment. The estimate of the labor force was more than three million less in August 2020 than in August 2019, while those classified as ‘not in labor force’ increased by more than four million over the same interval.
Also note that while the estimated seasonally adjusted labor force participation rate increased by 0.3 percentage points between July 2020 and August 2020, the labor force participation rate with data not seasonally adjusted actually fell slightly in August 2020 compared with July 2020. Although the decrease was only about 0.2 percentage points, does a decrease in the labor force participation rate when the economy is in either a recession or the early phase of a recovery seem consistent with a well-functioning labor market?
Readers may want to note that a broader measure of the unemployment rate, U6, remained above 14 per cent in August 2020, although on a more positive note that is a drop of more than two percentage points from the previous month. Unfortunately, of those who have lost employment, the U.S. BLS release indicates a rising number of cases of long-term unemployment.
How long will what could be the beginning of an economic recovery in the U.S. last when (1) the COVID-19 coronavirus pandemic may not be improving, (2) over 800,000 people have filed initial jobless claims each week for about five months (based on data from the U.S. Employment and Training Administration and accessed from the St. Louis Fed’s FRED website), and (3) the additional $600 of weekly unemployment compensation has expired without further additional compensation in sight and at best a delay in other expansionary fiscal policies? Let’s hope for an end to the pandemic, many more jobs created without job losses, and additional expansionary fiscal policies.
For everyone celebrating this weekend, Happy Labor Day!
Web Sites Used for this Blog Entry
https://www.bls.gov/news.release/empsit.nr0.htm
https://www.bls.gov/news.release/empsit.t01.htm
https://www.bls.gov/news.release/empsit.t15.htm
https://fred.stlouisfed.org/data/ICSA.txt
(Please realize that subsequent data revisions may cause changes in the above analysis. Also, please note that the above U.S. BLS web pages for releases of news likely change from month to month so that they will likely have information for September 2020 rather than August 2020 by some point in early October 2020. Thanks for your understanding.)
