Union members and their families march through downtown Detroit for the annual Labor Day parade. Thousands attended the march that called for union rights and jobs. (Photo: Abayomi Azikiwe), a photo by Pan-African News Wire File Photos on Flickr.
A tale of 2 employment surveys, covering US households and businesses, at a glance
By Associated Press
Updated: Friday, August 3, 9:16 AM
The U.S. economy added 163,000 jobs in July. Yet the unemployment rate rose to 8.3 percent.
Why didn’t the increase in jobs lower the unemployment rate?
Because the government does one survey to learn how many jobs were created and another survey to determine the unemployment rate. Those surveys can produce results that sometimes seem to conflict.
One is called the payroll survey. It asks mostly large companies and government agencies how many people they employed during the month. This survey produces the number of jobs gained or lost. In July, the payroll survey showed that companies added 172,000 jobs, and federal, state and local governments cut 9,000.
The other is the household survey.
Government workers ask whether the adults in a household have a job. Those who don’t are asked whether they’re looking for one. If they are, they’re considered unemployed. If they aren’t, they’re not considered part of the work force and aren’t counted as unemployed. The household survey produces each month’s unemployment rate.
In July, the household survey showed that the number of people who said they are unemployed rose by 45,000. In a work force of155 million, that doesn’t make a big statistical difference. But it was enough to raise the unemployment rate to 8.3 percent from 8.2 percent in June.
Unlike the payroll survey, the household survey captures farm workers, the self-employed and people who work for new companies. It also does a better job of capturing hiring by small businesses.
But the household survey is more volatile from month to month. The Labor Department surveys just 60,000 households, a small fraction of the more than 100 million U.S. households.
By contrast, the payroll survey seeks information from 140,000 companies and government agencies — and they employ roughly one-third of non-farm employees. The employers send forms to the Labor Department noting how many people they employ. They also provide wages, hours and other details.
Most Americans focus more on the unemployment rate, which comes from the household survey. But economists generally prefer the jobs figure from the payroll survey.
Economists note that the surveys tend to even out over time. Since the recession ended in June 2009, the payroll surveys have shown that employers added roughly 2.7 million jobs. The household surveys have shown that more than 2.2 million more people said they found work.
Why Washington Accepts Mass Unemployment
By Jonathan Chait
Good news! The economy added 163,000 jobs last month, just a bit over the level required to keep up with population growth. A return to a free fall now seems less likely. On the other hand, there is the small footnote that the return to full employment is nowhere in sight. The recovery looks safe for those of us who are not already screwed. That, sadly, has come to be the primary focus of our economic policy.
In the years since the collapse of 2008, the existence of mass unemployment has stopped being something the economic powers that be even pretend to regard as a crisis. To those directly impacted, the economic crisis is an emergency, a life-altering disaster the damage from which will endure for years. But most of those in a position to address it simply have not seen it in such terms. History will record that the economic elite has viewed the economic crisis from a perspective of detached complacency.
Two events from the last week have underscored this disturbing reality. The most widely covered was the Federal Reserve’s announcement that, despite a weakening economy, it still would not take steps to stimulate growth. The Fed may not like mass unemployment, but it dislikes inflation even more, and in its calculus, the hypothetical prospect of the latter outweighs the immediate reality of the former.
Here’s a second case, smaller but even more telling. The Obama administration has tried to prevail upon Edward DeMarco, the acting director of the Federal Housing Finance Agency, to offer lower mortgage rates to underwater home owners through Fannie Mae and Freddie Mac, which he controls. What interests me is not the proposal itself, nor even DeMarco’s obstinate refusal, but an editorial in the Washington Post applauding DeMarco for refusing to implement the program.
The Post is the voice of the Washington centrist establishment, and the logic of the editorial is a telling signpost. The Obama administration had argued to DeMarco that the mortgage relief was a pure win-win. Not only would the lower mortgage rates provide relief to Americans desperate to keep their homes, and secondarily to give them more purchasing power for other things that would provide a small economic stimulus, it would save the government money: with lower mortgage rates, fewer would default on their government-owned mortgages. DeMarco replied that he believed the taxpayers would end up spending money on the deal: not much, but some.
The Post’s thumbs-up editorial of DeMarco endorsed the reasoning that only a relief program that could be assured to cost the taxpayers nothing was worthwhile. It concluded, “with signs multiplying that the housing market may be finally bottoming out without this additional stimulus, perpetuating this particular battle does not strike us as the best use of the secretary’s time.”
There are signs we’ve hit bottom. Nothing to worry about here. Why risk the possibility of a small outlay merely to provide relief to hundreds of thousands of desperate people? This is such a perfect statement of the way the American elite has approached the economic crisis. They concede that it is a problem. But there are other problems, you know.
It’s important to respond to arguments on intellectual terms and not merely to analyze their motives. Yet it is impossible to understand these positions without putting them in socioeconomic context. Here are a few salient facts: The political scientist Larry Bartels has found (and measured) that members of Congress respond much more strongly to the preferences of their affluent constituents than their poor ones. And for affluent people, there is essentially no recession. Unemployment for workers with a bachelors degree is 4 percent — boom times. Unemployment is also unusually low in the Washington, D.C., area, owing to our economy’s reliance on federal spending, which has not had to impose the punishing austerity of so many state and local governments.
I live in a Washington neighborhood almost entirely filled with college-educated professionals, and it occurred to me not long ago that, when my children grow up, they’ll have no personal memory of having lived through the greatest economic crisis in eighty years. It is more akin to a famine in Africa.
For millions and millions of Americans, the economic crisis is the worst event of their lives.
They have lost jobs, homes, health insurance, opportunities for their children, seen their skills deteriorate, and lost their sense of self-worth.
But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.
Job growth steps up, but jobless rate rises
By Lucia Mutikani
WASHINGTON (Reuters) - U.S. employers in July hired the most workers in five months, but an increase in the jobless rate to 8.3 percent could keep prospects of further monetary stimulus from the Federal Reserve on the table.
Nonfarm payrolls rose 163,000 last month, the Labor Department said on Friday, snapping three straight months of job gains below 100,000 and offering hope for the ailing economy.
But the unemployment rate rose from 8.2 percent in June, even as more people gave up the search for work and a survey of households showed a drop in employment.
"As long as the unemployment rate is high, the central bank will have to consider further stimulus," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California.
The Federal Reserve on Wednesday sent a stronger signal that a new round of major support could be on the way if the recovery did not pick up. The labor market has slowed after hefty gains in the winter, spelling trouble for President Barack Obama.
A recent Reuters/Ipsos poll showed 36 percent of registered voters believe Republican presidential candidate Mitt Romney has a better plan for the economy, compared to 31 percent who had faith in Obama's policies.
White House economic adviser Alan Krueger told Reuters Insider the rise in the unemployment rate was unwelcome. Romney said the rise in the jobless rate was "a hammer blow to struggling middle-class families."
While payrolls beat economists' expectations for an increase of 100,000, details of the household survey were not encouraging.
A broad measure of unemployment, which includes people who want to work but have stopped looking and those working only part time but who want more work, edged up to 15 percent from 14.9 percent in June.
In addition, the labor force participation rate, or the percentage of Americans who either have a job or are looking for one, fell to 63.7 percent last month from 63.8 percent.
Economists are skeptical July's job growth pace will be sustained given the clouds from a potential tightening in fiscal policy next year and the ongoing debt troubles in Europe hanging over the economy.
WILL GAINS BE SUSTAINED?
"The key question is now is will it be sustained? The backdrop remains challenged, seeing anything meaningfully better than this will in itself be a challenge," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York.
"We're still in an environment where productivity is slowing, where profit growth is slowing, and we don't think that is a robust environment to see meaningful job gains."
Stocks on Wall Street rallied on the report. Investors were also cheered by a second report showing the pace of growth in the services sector edged up in July as new orders gained traction.
Prices for U.S. government debt fell and the dollar weakened against a basket of currencies.
Data last week showed the economy grew at an annual pace of 1.5 percent in the second quarter, far short of the 2.5 percent rate needed to keep the unemployment rate stable.
The private sector again accounted for all the job gains, adding 172,000 new positions. Government payrolls dropped by 9,000, as cash-strapped local governments laid off teachers.
Construction employment dipped 1,000, despite a rise in home building. Manufacturing payrolls increased 25,000, largely because of fewer layoffs in the auto sector as manufacturers kept production lines running during the month.
Within the vast services sector, employment gains were fairly widespread. From retail to professional and business services, employers added workers.
Temporary help services increased 14,100 after rising 21,100 the prior month. But hiring in the utility sector was restrained by a strike at a power firm in New York last month.
Average hourly earnings increased 2 cents last month, suggesting consumer spending will struggle regain steam after it slowed sharply in the second quarter.
The average workweek was unchanged at 34.5 hours.
(Reporting By Lucia Mutikani; Editing by Neil Stempleman)
U.S. added 163,000 jobs in July; unemployment rate ticks up to 8.3 percent
By Peter Whoriskey, Friday, August 3, 9:20 AM
The U.S. economy added more jobs in July, but the unemployment rate ticked up to 8.3 percent, the Labor Department reported.
The monthly jobs figures released on Friday offered both good and bad news.
On the one hand, payrolls expanded by 163,000 people, a promising rise after three straight months of disappointing job gains. Jobs in manufacturing rose by 25,000; there were 9,000 fewer jobs in government.
“It would appear that the slow patch we’ve had since April is over,” Gus Faucher, senior macro economist at PNC Financial Services Group, said before the release of the numbers.
But the rate of unemployment nevertheless rose from 8.2 percent to 8.3 percent. It was a small enough difference in the rate that the Labor Department called it “essentially unchanged,” but more Americans are looking for work. The jobless rate has been above 8 percent since February 2009.
“It just looks like we’re moving sideways,” said Paul Ashworth, chief U.S. economist for Capital Economics.
On Friday morning, Republican candidate Mitt Romney focused on the dismal aspects of the report .
“Today’s increase in the unemployment rate is a hammer blow to struggling middle-class families,” Romney said in a statement. “We’ve now gone 42 consecutive months with the unemployment rate above eight percent. Middle class Americans deserve better, and I believe America can do better.”
President Obama has shrugged off such remarks and derided Romney’s plans, referring to them as “top down economics” that aid the rich by punishing the middle class.
The White House has focused instead on the economy’s emergence from the recession, despite the ongoing woes in the European economy.
“While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression,” Alan Krueger, chairman of the White House Council of Economic Advisers, said in a statement.
He noted that the economy has now added private sector jobs for 29 straight months, for a total of 4.5 million jobs.
Even so, the broadest measures of the U.S. employment situation show continuing difficulties in the job market.
More people, for example, left the labor force, either retiring or giving up the search for work. Of those people remaining in the civilian labor force, a slightly larger portion are unable to find work - hence the uptick in the unemployment rate.
About 12.8 million people in the U.S. are unemployed.