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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

Behind the unemployment rate: Private-sector hiring still weak

As we do every month, let's unpack the data buried in today's June jobs report from the Labor Department's Bureau of Labor Statistics:

  • Headline numbers: The official U.S. unemployment rate dropped from 9.7 percent to 9.5 percent. About 125,000 jobs were lost in June. The number of long-term unemployed (out of work for 27 or more weeks) was essentially unchanged from May at 6.8 million. Total unemployed in the U.S. was down just a bit at 14.6 million.

  • Behind the headlines, Point 1: Don't focus on the 0.2 percent decline in the overall rate and think it's good news. The economy lost jobs. The overall number went down only because people left the labor force. That means that, when the BLS conducted its survey, these were people who were out of work but who had not looked for work recently -- probably, they had become discouraged and given up -- so they are not officially counted as unemployed. When the labor force shrinks, it shrinks the unemployment number.

  • Behind the headlines, Point 2: A truer unemployment rate can be figured by starting with the 9.5 percent number then adding all of the people who should be working full time but are not: the discouraged non-workers we spoke of above and people who are working part time but would prefer to work full time. That unemployment rate in June was a much higher 16.5 percent, down from 16.6 percent in May. Though these people are not officially counted as unemployed, they certainly make demands on the system and probably feel pretty unemployed. The number of discouraged workers in June stood at 1.2 million, up 414,000 from a year ago.

  • Behind the headlines, Point 3: 125,000 net jobs were lost from the economy last month because the U.S. Census let go 225,000 temporary workers. Until the decennial count ends this fall, the Census will be the biggest force in the U.S. labor force, as it adds workers in some months and lets them go in others, sort of like a big job accordion. Which brings us to ...

  • Behind the the headlines, Point 4: Only 83,000 private-sector jobs were added in June. That's significantly up from the mere 15,000 private-sector jobs added in May, but it was still below Wall Street estimates and more important is below the number of private-sector jobs that need to be added each month just to keep up with population growth, which is about 125,000. As we saw in the previous month, of the 440,000 new jobs added to the economy in May, almost every one of those jobs were Census jobs, meaning they are only temporary. Private-sector employers are still refusing to hire because they are too scared of where the economy may be going.

  • Behind the headlines, Point 5: Long-term unemployment number is a problem. In June, 6.8 million people were unemployed for 27 weeks or longer. That's up from 6.1 million in February of this year and up from 4.4 million in June 2009.

    In short, this is not a disastrous jobs report, but it's a bad sign that a jobs report that includes a 9.5 percent unemployment rate is not considered disastrous. Our new normal -- unemployment near 10 percent, European levels -- is going to stick around for a while.

  • By Frank Ahrens  |  July 2, 2010; 2:50 PM ET
    Categories:  Data , Unemployment  
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    Comments

    It is now obvious that the Obama stimulus plan has been a failure.

    Posted by: farmsnorton | July 2, 2010 3:51 PM | Report abuse

    Cut all wages/salaries by 1/3 and all will be well.

    Posted by: ravitchn | July 2, 2010 4:26 PM | Report abuse

    Government wages definitely need to be cut.

    Private sector wages should all be cut by 10%-20% and 20-50% for upper management.

    As for jobs, we need to stop outsourcing jobs overseas and do the necessary things (like not overtaxing businesses) to bring the work back home.

    Just like homes, salaries, tuition and other things got out of whack for a lot of people over the last 10 years. Most are probably making more then they should.

    Posted by: cavatellie | July 2, 2010 5:06 PM | Report abuse

    Another example of the corporate/fascist nexus preventing the economic recovery. Consorting with Republican fascists and their willing mouthpieces at the Post, Times and the major media such as MSNBC and CNN, they are deliberately undermining the efforts of an African American president to change how our society works. They fought health care, they fight global warming - denying it like they deny the Holocaust of African slaves transported from Africa - and work to turn this country into a corporate dominated slave society. The only hope is for government to seize control of this "private" property and halt the march of the corporate/fascists. Obama should declare a state of emergency, prevent these fascists in Nevada, Kentucky, Florida, Pennsylvania and other states from running in the elections, all in the name of the people. If the fascist/corporate/Republicans seize power in November ordinary people will be little better than slaves.

    Posted by: Pelosiforpres | July 2, 2010 6:49 PM | Report abuse

    We voted for Obama without realizing how awful a black in the White House would be.


    W

    Posted by: ravitchn | July 2, 2010 7:18 PM | Report abuse

    If the republicans succeed in blocking the extension of unemployment benefits the unemployment rate will drop dramatically next month as tens of thousand of people move from the "unemployed" to the 'discouraged" category. You can than RR for that slight of hand. Oh by teh why the number of jobs needed to be added each month just to keep up with population growth is 150,000 not 125,000.

    Posted by: tianyisun | July 2, 2010 7:55 PM | Report abuse

    A second recession started back in mid-May. Meanwhile, we won't feel the most gripping effects of it until - ironically enough - October. Some one say deja vu?

    Posted by: thelongblueline | July 2, 2010 10:05 PM | Report abuse

    The BLS also opines trends for future emoloyment in many classifications including growth or contraction, wages for the various groups etc. One item they do not address, nor do many other navel gazers, is the vast amount of foreign made consumer goods now marketed by American companies. Industrial employment is on the decrease in the U.S. due to technology and companies tightening the workplace. Some forcasts are up but mostly in the lower paying segments. People spend a good share of their money, especially those lower on the payscale, on consumer goods. As these are primarily foreign made goods (walk around Wal-Mart or Home Depot for examples and observe country of origin rather than the name of the company) Even using just BLS figures, we will come out of the recession but with lower median incomes which reduces purchasing power. Ths is coupled with the growing trend of corporate mergers which lessens true competition.

    Posted by: jm161 | July 7, 2010 9:01 AM | Report abuse

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