August Job Report Is A Double Edged Sword
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The monthly report on jobs shows a muddled picture. In total, the U.S. lost jobs as a result of more census-taker positions coming to an end. But private sector hiring is still growing, and the manufacturing industry is experiencing 13 months of expansion.
First, the bad news: census jobs have been fading out as the task of counting all individuals residing in the U.S. is wrapping up. 121,000 jobs were lost in August, while 67,000 jobs were gained in the private sector for a total loss of 54,000 jobs. The result is a rise in the unemployment index to 9.6 percent from July’s 9.5 percent. Experts long complained census jobs were artificially propping up the economy, as these positions are not permanent and distort the image of U.S. labor strength. In total, roughly half a million individuals were put to work to count this country’s population. In July, 143,000 census workers were let off government payrolls.
But the payroll jump caused by the census can be compared to retailers and service providers hiring temporary staff to fill employer seasonal needs. An index used to measure teenage employment reveals the summer has been a blessing for their pockets, as their job presence has jumped to nearly 18 percent for the summer months. Last year, the winter shopping season added 100,000 new temporary positions. Even though temporary employment is a fixture in the U.S. job market, observers isolated the boost in jobs the census created likely because they viewed it as a federal jobs program. Allegations of politicizing the census jobs were not difficult to find. However, it is deceiving to the public to criticize census jobs alone, as they addressed a need in service not unlike the summer and winter jobs splurge.
As for the more clear-cut good news, the August jobs report beat speculation. Analysts polled by Reuters feared a total jobs drop-off of 100,000 and only 41,000 new private sector jobs created. Earlier in the week, manufacturing reports indicated the industry is on a 13-month expansion binge. This coincided with similar growth in China, suggesting the world’s second largest economy has a domestic consumer market that is hungry for U.S. and other international goods. While jobs in manufacturing dropped by 27,000, export orders are up and capital raised for machines has also increased—indicators that support the notion gains in manufacturing are here to stay. The influential Institute for Supply Management said their manufacturing index rose to 56.3 from July’s 55.5. A value of 50 indicates industry growth.
Of course manufacturing no longer makes up a third of this country’s job force, and for the labor market to correct itself within five years, 300,000 new jobs must be added each month. Federal prophylactics to encourage hiring have been considered, but the election season makes many Democrats hesitant to tack on more spending measures. Non-spending alternatives include a payroll tax holiday that is being mulled over by the White House. According to the CBO, cutting payroll taxes results in relatively more private spending than tax credits for the middle class. Meanwhile, the Federal Reserve is still considering what it can do encourage investment, like promising long-term low interest rates and buying up troubled bonds. August marks the first time since the start of the recession that the unemployment rate has increased year-on-year.
Mikhail Zinshteyn is a staff writer for Campus Progress. You can e-mail him at mzinshteyn@googlemail.com.
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