July 2010 Employment Report: Lackluster

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Total U.S. nonfarm employment fell by 131,000 in July, the second consecutive monthly decline, but the unemployment rate remained unchanged at 9.5 percent, according to the U.S. Bureau of Labor Statistics (BLS). Federal government employment fell, as 143,000 temporary workers hired for the decennial census completed their work, while private-sector payroll employment edged up by 71,000.

Some observers argue that July’s job-loss figure was actually worse than it appeared, because the BLS revised June’s figure from -125,000 to -221,000. Had June’s number been left unrevised, July’s change in employment would have been -227,000 instead of -131,000 (-96,000 - 131,000 = -227,000).

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It is not unusual for employment numbers to suffer a setback or two during the economic recovery phase, but it is somewhat disconcerting to see back-to-back months of job losses. This is a census year, however, so perhaps this time is truly different.

One encouraging observation is that the annual percentage change in private employment returned essentially back to the break-even point in July. As one analyst put it, “at least we’re not dropping off a cliff anymore – at least temporarily.”

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Because 143,000 Census workers were given their “walking papers” but 202,000 government employees lost their jobs, that implies other (presumably, mostly full-time) employees were also let go. Indeed, as the table above shows, that is precisely what happened; the bulk of those lost government jobs occurred at the local level.

Other details from the employment report include:

• The number of unemployed persons (14.6 million) was unchanged.
• The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 6.6 million. These individuals made up 44.9 percent of unemployed persons.
• The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged over the month at 8.5 million but has declined by 623,000 since April.
• About 2.6 million persons were marginally attached to the labor force, an increase of 340,000 from a year earlier. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey. Among the marginally attached, there were 1.2 million discouraged workers (those not currently looking for work because they believe no jobs are available for them). The remaining 1.4 million persons had not searched for work in the four weeks preceding the survey for various reasons
• The average workweek for all employees on private nonfarm payrolls increased by 0.1 hour to 34.2 hours.
• Average hourly earnings of those employees increased by $0.04 (0.2 percent) to $22.59 in July.