August 1, 2008

The Government’s July Employment Report

Filed under: Economy,Taxes & Government — Tom @ 8:25 am

Geez, I wanted to get to this earlier, but two sluggish browsers and having to restart everything to get back on track got in the way. Here goes.

The Run-up

ADP’s National Employment Report came in Wednesday with +9,000 private nonfarm jobs. If I recall correctly that was seen as a bit of a surprise on the upside. I’m going to look at the ongoing disparity between ADP and BLS after digesting the post-release numbers later this morning.

The estimates I’ve seen are these:

  • RTT News – seasonally adjusted total employment to going down by 72,000 jobs, unemployment rising to 5.6%;
  • MarketWatch – jobs down 70,000; rate up to 5.6%;
  • Thomson Financial via Forbes – Jobs down 72,000, rate up to 5.6%;
  • is going the outlier route, and predicting over 100,000 jobs lost, without specifying an unemployment rate.

The key question

Since the change in seasonally adjusted employment reported widely actually depends on how the current month’s actual job additions or reductions compared to previous years, I should note that this is how the previous three years have come in:


So the key question is really whether July’s normally-occurring reduction will above or below the trend of previous years (the seasonal adjustment calculation considers a lot more than the past 3, but you get the point). I’m guessing that the number may come in at -1.2 million, which will mean a reported seasonally adjusted job loss that is slightly smaller than expected.

Having said that, this may take place for an ironic reason. You see, the primary reason for normal July decline is that teachers are not teaching during the summer months (even though most spread their pay over 12 months). But if those teachers are feeling less than secure about their situation, more of them than usual make have taken on part-time or even full-time summer work and thus stayed in the workforce. That theory won’t be trackable, but it’s something I believe may be happening.

Here’s the link for the report from the Bureaus of Labor Statistics (BLS) when it comes.


The unemployment rate rose to 5.7 percent, and nonfarm payroll employment continued to trend down in July (-51,000), the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and several service-providing industries, while health care and mining continued to add jobs. Average hourly earnings rose by 6 cents, or 0.3 percent, over the month.

So Blah3 was half-right (sorry, couldn’t resist :–>).

Jobs Report Highlights:

- Revision to June’s original -62,000 (seasonally adjusted) — now -51,000, an improvement of 11,000.
- Revision to May’s once-revised -62,000 — now -47,000, an improvement of 15,000.
- Net change including prior-month revisions is -25,000 (-51+11+15).

- Actual job reduction in June — -1,458,000 (worst individual July result since 2001).
- Revision to June’s actual jobs added of +241,000 — up 48,000 to +289,000 (still the worst in at least 10 years).
- Revision to May’s once-revised actual jobs added of +653,000 — up 22,000 to +675,000 (also the worst in at least 10 years).
- Total change in actual jobs lost, including prior-month revisions is +1,388,000 (-1458+48+22).

Unemployment Rate Report Highlights:

- Unemployment rate (NOT seasonally adjusted) — 6.0% (was 5.7% in June, 4.9% in July 2007).

- African-American unemployment rate (seasonally adjusted) — 9.7% (was 9.2% in June, 8.1% in July 2007).
- African-American unemployment rate (NOT seasonally adjusted) — 10.9% (was 9.8% in June, 8.9% in July 2007)/

- Teenage unemployment rate (seasonally adjusted) — 20.3% (was 18.1% in June, 15.3% in July 2007).
- Teenage unemployment rate (NOT seasonally adjusted) — 21.0% (was 21.9% in June, 15.5% in July 2007).

- Total workforce (seasonally adjusted) — 154.603 million, up 213,000 (was 154.390 million in June).
- Total workforce (NOT seasonally adjusted) — 156.300 million, up 718,000 (was 155.582 million in June).

- People working (seasonally adjusted) — 145.819 million, down 72,000 (was 145.891 million in June).
- People working (NOT seasonally adjusted) — 146.867 million, up 218,000 (was 146.649 million in June).

- June change in the number of unemployed (seasonally adjusted) — up 285,000 (from 8.499 million to 8.784 million).
- June change in the number of unemployed (NOT seasonally adjusted) — up 500,000 (from 8.933 million to 9.433 million).


  • Although it’s easy to take heart in the relatively small net change including prior-month revisions (and I will to an extent, because the press probably won’t mention it at all), this report does not paint a pretty picture.
  • I see a lot of people getting into the workforce and trying to find employment, and not getting it, particularly teens and African-Americans (maybe more teachers too, but I don’t think so, since the total increase in the not seasonally adjusted workforce in the past few months is comparable to prior years). Given anecdotal info about illegals self-deporting or having a harder time finding work at legitimate employers, it seems that employers who had been using illegals may be deciding not to replace them with other unskilled workers who might be available, perhaps largely due to the next point.
  • Since it’s summer, this is the time to make the point that the higher minimum wage passed by the current Congress may be a key cause of the way-higher (5%-plus) teen unemployment rate, and perhaps the higher African-American uemployment rates too.


  1. I think it is clear that history is repeating itself and that is due once again to high energy prices. This was totally avoidable if domestic drilling were permited on a larger scale.

    Comment by dscott — August 1, 2008 @ 8:41 am

  2. Something else is adding into the unemployment numbers as well: teenagers are being especially hard hit.

    This isn’t so surprising as teenagers account for over 25% of those earning the minimum wage. With the increase in the U.S. minimum wage in July, you would expect that a number of businesses would be shedding these jobs in response to the increase before it takes effect.

    Teen unemployment has risen during the course of this year from 15.8% in March 2008 to 18.7 in May (it dipped slightly to 18.1% in June), and now is up to 20.3% for July 2008, the month the minimum wage hike took effect.

    Just looking at the seasonally adjusted figures, between March 2008 and July 2008, 969,000 more individuals in the civilian labor force are counted as unemployed. Between March 2008 and July 2008, 345,000 more individuals between ages 16 and 19 are unemployed, over a third of the total change (35.6%).

    If teens were becoming unemployed at rates similar to those Age 20 and older, the U.S. unemployment rate would be around 5.4-5.5%.

    Comment by Ironman — August 1, 2008 @ 10:03 am

  3. #2, doesn’t teen unemployment then beg the question if they were excluded from the formal reporting of the unemployment figure, what would unemployment really look like? That might be an interesting result if they were taken out of the picture. Given the spike in unemployment starting in May or June, doesn’t it make sense that 4 million students graduating high school and another couple million graduating college with a BS might be the real reason for the uptick???

    Comment by dscott — August 4, 2008 @ 9:47 am

  4. Good points. My top-of-head estimate looking at the numbers is that it’s .2% – .3% higher this year than last because of higher teen unemployment levels, which agrees with Ironman above.

    Comment by TBlumer — August 4, 2008 @ 3:02 pm

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