| Skeptism Abounds Over September Drop In Unemployment Rate |
| Oct-05-2012 |
| Keywords: unemployment, 7.8, september |
News of the huge drop in unemployment for the month of September is being greeted with a huge amount of skepticism.
According to the Labor Department, non-farm payrolls, employers hired 114,000 people in September, just topping estimates of 113,000. Meanwhile, the unemployment rate plunged by .3 percentage points, accounting for some 837,000 American who claim they found jobs last month.
You might ask yourself, where did the 724,000 jobs come from that weren't reported by traditional employers surveyed by the Labor Department?
A large majority of those reported as finding work took on part-time jobs or have started up their own businesses. Unfortunately, neither of those scenarios really add to the nation's GDP nor provide wages strong enough to sustain a single person's needs, let alone those of a family.
Differences in how the two surveys are performed may also be at play. One survey, the establishment survey, asks companies how many people they hired. That's where we get the payroll number; in September the figure was 114,000.
The other is the household survey, where Labor calls homes and asks folks if they are working. That's how we figure out the workforce and the unemployment rate.
Jobs from the establishment survey are more important for the overall economy. They generate higher salaries, represent optimism and growth for corporate America and are less volatile because they are more sustainable.
To be sure, the household survey does represent the entrepreneurial spirit our country should be fostering and treasuring - but not to the tune of 873,000 new jobs, the biggest jump since June 1983. Something more complicated is clearly at work.
The labor force participation rate, which reflects those working as well as looking for work, edged higher to 63.6 percent but remained around 30-year lows. The total labor force grew by 418,000, possibly accounting for the relatively modest net level of job growth.
There were 114,000 jobs added in September, and that is being viewed as a beat of estimates, since it was 1,000 more than the 113,000 expected. But, a quick look beyond the headline shows continued weakness. The 114,000 figure came because there was a 10,000 rise in government employment. Most economists expected a drop in government employment.
Private sector hiring was weaker than expected. Private sector jobs are what help grow the economy. So the non-farm payroll report is indicating that we are growing jobs, but those jobs are not the ones that help growth the economy. It's the economy that supports government jobs. |
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Posted by Lou Dobbs Staff at 9:00 PM Email to a friend |
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