Jobless rate down despite more losses
A "Now Hiring" sign displayed in a store window
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KAI RYSSDAL: Let's start with the baseline economic numbers for the day and then take a minute to put them into some kind of context. As the president alluded to this morning, the labor market has come a long way in the past six or so months. The July unemployment report that we got today was horrible -- 247,000 jobs lost last month -- but at the same time, really quite promising. It's light years from the three-quarters of a million jobs we lost back in January.
At the same time, the unemployment rate, that is, the percentage of the population looking for work has gone down, off a tenth percent to 9.4 percent. So what to do? How to interpret a economic report that on the one hand is bad, but on the other is pretty good.
Marketplace's Mitchell Hartman walks us through the labor market landscape.
Mitchell Hartman: The first thing to keep in mind is that there are two government employment surveys. One finds out from employers how many positions they added or cut last month -- that's the jobs number. The other asks individual Americans how many people in their household are out of work and looking for a job -- that's the unemployment rate.
In July, we lost jobs. Yet, the unemployment rate went down. Economist Nigel Gault of IHS Global Insight explains.
Nigel Gault: They might seem at odds, but what actually happened was, although employment was down this month, the number of people in the labor force -- the number of people out there actually looking for work -- that actually fell more steeply than employment.
Where'd all the extra unemployed people go?
Gault: Some people who may have been looking for work for awhile or may have perhaps been hoping that they were going to get a summer job this year, have decided that they're unlikely to find anything and they've actually stopped looking.
We'll get back to that increasing army of discouraged workers in a second. But first, let's look at those job loss numbers. 250,000 is still pretty dreadful, says Heidi Shierholz of the Economic Policy Institute.
Heidi Shierholz: The pain is still deepening in the real economy, but at a slower rate. We are definitely seeing a reduction in the pace of the losses. And that's good news.
Still, Shierholz says we have a long way to go until there are sustained job gains.
And to turn unemployment around, it can't be just 25,000 or 50,000 new jobs a month either, says University of Texas economist James Galbraith.
James Galbraith: In normal times, we would need to have 150,000 to 300,000 new jobs each month just to stay even.
That kind of job growth might be a year or more away. In the meantime, discouraged workers will keep trickling back into the labor market. Which means, long after economists declare the economy in recovery and long after employers stop cutting jobs and start creating new ones, America's households are still going to be suffering persistently high unemployment.
I'm Mitchell Hartman for Marketplace.