The Bureau of Labor Statistics (BLS) released on Friday that 215,000 jobs were added to the economy in the month of July, down considerably from the previous 12 month average of 246,000 jobs per month. The BLS also revised up, just slightly, the jobs numbers for the months of May and June. Unemployment still holds steady at 5.3%. And in other mediocre news, the “total” or U-6 unemployment rate ticked down one tenth of a percent from last month and is now at 10.3%.
So where does this put us in our quest to recover all the jobs that were lost during the recession as well as the economy’s ability to keep up with population growth, a figure I like to refer to as “jobs equilibrium”? The news for this month's quest of jobs equilibrium is not so good.
For the past several months our number crunching told us that we would reach a jobs equilibrium {we would have recovered all the lost jobs as well as jobs needed to have kept pace with population growth} in October of 2020. This month however, with July having falling far short of the previous 12 month job growth average, the numbers show that the date we will reach jobs equilibrium has been extended out another five months, to March of 2021.
How did we reach this conclusion?
Quite simply actually. Using the BLM’s own downloadable Excel file for monthly jobs count, we established that for the 16 month period that the economy was falling into recession, prior to Obama taking office, the economy shed some 4.4 million jobs. As well, the economy experienced an additional 2 million jobs shortfall of jobs needed to accommodate population growth over the same period. This means that on the day that President Obama took office, there was a 6.2 million jobs deficit, as a result of the recession.
Going forward we assumed that for each month following an additional 125,000 jobs needed to be created to accommodate the continued population growth, a figure we added to each of the following month’s jobs number extracted from the same BLS Excel file. Using this very simple methodology, we are able to keep tabs on the jobs deficit as the new jobs numbers come in each month.
To project forward we use the average jobs number of the most recent 12 months and of course we continue to consider that there will be an additional 125,000 jobs needed each month to keep pace with population growth.
What does this all mean?
It means simply that there are not enough jobs being created nor are they being created fast enough to achieve jobs equilibrium any time soon.
For the first time ever, more than 93 million Americans, the age of 16 and older, are not participating in the labor force. This has pushed the labor force participation rate to a 37 year low of 62.7%. And as we have just experienced this past July, where the number of jobs created fell well below the past years monthly average, the overall jobs recovery situation has worsened.
In order to achieve jobs equilibrium while President Obama is still in office, starting immediately, the average monthly jobs growth would have to jump to 525,000, which is well more than double the current average. This pace would have to be maintained through Obama’s final month in office to achieve this goal. This of course can never happen. But for the next president, whomever he or she may be, if they wish to reach jobs equilibrium during their first term in office, they are really going to have to step up jobs creation considerably.
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