By Frank Stricker
The U.S. economy performed pretty well in the second quarter (April-June), growing at the rate of 2.8%. Also, price increases have been moderating in many areas. In some opinion surveys, people believe that inflation rates will stay rather moderate. But there are areas of potential trouble, and not just that big money people have the power to sink the economy. Interest rates are still high and that discourages spending in key areas including housing and construction. And while real GDP growth of 2.8% is positive news, good growth rates are not enough to bring truly full employment.
Non-farm employers reported that they added just 114,000 jobs in July. That is low, it was lower than many expert predictions, and it was low enough to freak out big investors. And there are other reasons to be worried. In the Bureau of Labor Statistics (BLS) household survey, the number of employed grew by just 67,000 from June to July. Worse, the official unemployment rate has been rising for months and it increased two-tenths of a percent to 4.3%. That is still relatively low, but it is moving in the wrong direction, and it has increased by .8 over the last 12 months.
And 4.3% is not the half of it. National Jobs for All Network’s estimate of unemployment hit 10% in July. As you can see from the Full Count graphic, this number adds official unemployment, part-timers who want full-time work, and job-wanters who have not actively searched recently for work. That total gives you a better feel for job markets than the official rate. When we put the amplified number of unemployed—17.4 million–against the government’s estimate of job openings—8.2 million vacancies—it seems clear that normal job markets cannot supply what is needed.
Other numbers, too, suggest that it is getting harder to find a job, even though the economy has been growing. In recent months, the number of people filing initial claims for unemployment benefits has risen by about 10%. The number is still not particularly high, but the trend is not good. And such indicators are especially upsetting when Wall Street traders expect lower numbers than what the government reports. They can be a very touchy bunch.
Our conclusion from all this is that we need many more good jobs. The normal operation of the economy does not produce, unaided, enough good jobs. Unions and state and local governments can do a lot to improve compensation and job quality. But they do not have the economic might and governmental power to do all that we need. For starters, we need a new, improved, permanent WPA to provide good jobs.
Optional Reading Appendix (The Following Material Will Not be on the Test!)
An interesting take on job numbers appeared online on August 7 at Kelly Evans’ CNBC Exchange. Evans discussed the idea that our labor problem is not a shortage of jobs and too many layoffs–but an excess of job-wanters, due, in part to surging immigration.
To judge whether our labor force is just too big, I checked several months of the BLS’s Employment Situation. In July, the civilian non-institutional population ages 16 and over—that is, the general population from which the employed and unemployed population comes–was up 1.6 million over July of last year. Is that a huge increase? Not compared to the year before when it increased by 2,990,000. Growth in the adult population actually slowed over the past year.
Another perspective: the civilian labor force of people working or looking for work was up strongly from July of 2022 to July of 2023 when it increased by 3.1 million. Some of that must have been the post-Covid recovery. The annual increase has not continued at that level. From July of 2023 to July of 2024 the labor force increased by just 1.3 million people.
Another way of looking at the labor force of workers and job-searchers is through labor force participation rates. Is a larger percentage of the population flooding into the labor force? Not particularly. The share of adults who are working or looking for work has climbed since Covid, but at 62+% it is still lower than in every year from 2004 through 2020. In other words, there weren’t unusually high flows into the labor force. (For prime-age workers, 24-54, there might be a case to be made. Labor force participation rates have reached 83-84% in recent months. Those rates are high but not so exceptional for this age group.)
A final point. In the period of July 2023 through July 2024, among the categories of reasons for unemployment, the monthly category of new entrants who searched for but did not find work—including immigrants–increased by only 116,000. The category of job losers—people who were laid off, increased by 787,000. That is, people getting cut from their jobs were more numerous than new lookers not finding jobs. That does not seem to support the thesis that our main problem is not high unemployment, but too darn many people trying to find jobs.
Frank Stricker is on the board of the National Jobs for All Network and writes for NJFAN and Dollars and Sense. In 2020 he published a book called American Unemployment: Past, Present, and Future (2020). He taught History and Labor Studies at California State University, Dominguez Hills, for 37 years.
