Jobs report shows some ugly truths
Before getting too excited about the and a slight downward move in the unemployment rate, it鈥檚 probably worth a look under the hood.
As is usually the case, there is far more than meets the eye to the Labor Department鈥檚 report that the economy added 117,000 jobs last month and the unemployment rate fell to 9.1 percent.
Let鈥檚 start with the reality that fewer people actually were working in July than in June.
According to a Bureau of Labor Statistics breakdown, there were 139,296,000 people working in July, compared to 139,334,000 the month before, or a drop of 38,000.
But the job creation number was positive and the unemployment rate went down, right? So how does that work?
It鈥檚 a product of something the government calls 鈥渄iscouraged workers,鈥� or those who were unemployed but not out looking for work during the reporting period.
This is where the numbers showed a really big spike鈥攗p from 982,000 to 1.119 million, a difference of 137,000 or a 14 percent increase. These folks are generally not included in the government鈥檚 various job measures.
So the drop in the unemployment rate is fairly illusory鈥攕tick all those people back in the workforce and you wipe out the job creation and the drop in unemployment.
For once, some of the government鈥檚 other tools of economic voodoo didn鈥檛 help the count.
The vaunted birth-death model, a byzantine approximation of business creation and failure, actually subtracted 18,000 from the total job creation after a five-month run where it added a total of 741,000 positions to the count.
And the so-called 鈥渞eal鈥� unemployment rate, which adds in discouraged workers and others not counted as part of the headline unemployment rate, actually pulled back one notch to 16.1 percent.
But there鈥檚 plenty of bad news to go around otherwise.
The average duration of unemployment rose for the third straight month and is now at a record 40.4 weeks鈥攁bout 10 months and now double where it was when President Obama took office in January 2009. The total number unemployed for more than half a year now stands at 6.18 million, 130 percent higher than when the president鈥檚 term began.
Among the nuggets of good news鈥攖he jobless rate for blacks slipped to 15.9 percent and for Latinos to 11.3 percent, both at four-month lows.
But how good or bad the unemployment picture really may not come into view until next month, because of distortions from seasonal adjustments.
Including teachers and others who experience seasonal unemployment, total joblessness actually rose 1.23 million.
