The Good, The Bad, and The Ugly: The July Jobs Report

The Good:

Obviously, the good was that 209,000 jobs were created.  Additionally, 119,000 people rejoined the workforce rather than sit home or waste time trying to find a job that was impossible to find.  This month broke a long standing trend of people leaving the workforce.  As a result, a long-term trend of a falling labor participation rate was reversed with that rate rising from 62.8% in June to 62.9%.  Most notably, the number of people forced to take a part time job because there was no full time work fell by 129,000.  People 55 years and older continue to beat the general population with an unemployment rate of 4.5%.  This simply proves that older Americans are willing to work longer and that employers are more willing to hire the older worker because of their experience and dependability.

The Bad:

The unemployment rate went up from 6.1% to 6.2%. This is not as bad as it sounds because it was primarily driven by people re-entering the workforce.  This is typical of a recovering employment situation where discouraged workers start looking for work again; rather than not be counted as part of the workforce and not part of the calculus for the unemployment rate.  The U-6 unemployment rate continues to remain high at 12.2% and went up again this month.  Many consider this the true unemployment rate because it does not "exclude" discouraged workers.

The Ugly:

While teen (16-19) unemployment was lowered this month, it still stands at a horrible 20.2%.  But, the ugly fact was that Black teen unemployment rose again this month from 33.4% (last year) to July's 34.9%.  Simply, employers are more willing to employ older adults than hire the less experienced teens.  The high Black teen unemployment shows that small businesses still haven't recovered in the minority neighborhoods of our major cities. High teen unemployment is one of the fallouts from increasing the minimum wage because older adults are more likely to compete with teens for entry level, minimum wage jobs.  Long term, this could result in a highly unemployable subset of workers who gained no experience during these lean years of high teen unemployment.  It could also result in increased income inequality in the years going forward.

Reference:

Employment Situation Report for July 2014:  Above data from Tables A-1, A-2, A-9, A-10, and A-15: http://www.bls.gov/news.release/empsit.nr0.htm

Old Workers Hit New Record High As Jobs For Key 25-54 Age Group Slide By 142K: http://www.zerohedge.com/news/2014-08-01/old-workers-hit-new-record-high-jobs-key-25-54-age-group-slide-142k