The Department of Labor released its August Bureau of Labor Statistics (BLS) report, today, and it’s a mixed bag for watchers of the economy. The unemployment rate is down, which is good, but the workforce participation rate has hit rock bottom, which is bad.
The current unemployment rate is at 5.1 percent, according to the report, which is the lowest it has been in seven years. Although that would suggest that the economy is turning around, other factors seem to be holding the recovery back.
There were 173,000 jobs added in August, below the 203,000 projected adds and much lower than the average 212,000 jobs added per month this year. The number of jobs added is not high enough to encourage employers to increase wages beyond the 2.2 percent gain in August. Although this is better than expected it is still not in the 3.5 percent growth that the Federal Reserve is hoping for.
Workforce participation, however, is at an all-time low. Over 94 million Americans have dropped out of the labor force. With a labor participation rate of 62.6 percent, even the addition of 173,000 jobs means that more people are without work than have ever been. This rate means that even claims of full employment have to be modified for workforce participation. A position even the government shares. As Deputy Secretary of Labor Christopher Lu said to The Washington Post in a phone interview:
I would challenge you on the notion of full employment. There are 6.5 million people who are working part-time and want to work full-time. I would say — and they would say — that we’re not at full employment right now.
Although the initial numbers suggest that the recovery is continuing, the lack of workforce participation and lower than expected wage increases and added jobs means that this recovery is not helping the regular working person very much.
