August 2012 Employment Report

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According to the Bureau of Labor Statistics (BLS) non-farm payroll employment rose by just 96,000 in August, and the unemployment rate dropped by 0.2 percentage point to 8.1 percent. Three-fourths of August’s job gains occurred in food services and drinking places (+28,000), in professional and technical services (+27,000), and in health care (+17,000). Government employment shrank by 7,000. The change in total non-farm payrolls for June was revised by -19,000 (from +64,000 to +45,000), and the change for July was revised by -21,000 (from +163,000 to +141,000).
 

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Employment is converging with the previous peak at a slower pace than nearly all prior recessions going back to 1973; circles in the chart above indicate when previous recoveries reached their corresponding pre-recessionary employment highs. The economy still has 4.72 million fewer jobs than at the January 2008 peak.
 

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The number of people not in the labor force rose by 581,000 in August, for a new all-time high of 88.9 million that is 500,000 more than the previous record set in April. The ratio of employed persons to the entire population dipped lower in the range seen since the end of 2009.
 

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The civilian labor force participation rate (the share of the population 16 years and older working or seeking work) dipped to 63.5 percent. At the same time, the annual percentage increase in average hourly earnings of production and non-supervisory employees fell back to 1.28 percent. With the price index for urban consumers rising at a 1.4 percent annual pace, that means wages are falling in real terms (i.e., wage increases are not keeping up with price inflation).
 

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Full-time employment rose by 43,000 jobs, while part-time employment dropped by 215,000. We infer from those numbers that only a fraction of the part-timers found full-time work; the rest either became unemployed or left the workforce. It appears the rising trend in full-time employment, although perhaps not reversed, has at least stalled out.