Friday was jobs number day for the month August, and the unemployment picture still remains the same – stagnant. Two things are clear: it's tough to be young and especially tough to be a young person of color.
The unemployment rate ticked down a tenth of a percent to 6.1 percent, but the new normal for the past year has been that declines in unemployment are driven by discouraged American workers dropping out of the labor market not job growth. Employers only added 142,000 jobs in the month of August (the least for 2014) –falling far short of the 220,000 experts predicted and below the more than 200,000 averaged each month this year. The number of jobs added in July was revised down by 28,000 as well.
Pundits on the left think you can’t read too much into one month, but they say that about every month now. The Administration and Democrats in Congress are hanging their hat on a positive economic recovery to hold onto their Senate majority. That won’t be enough to convince Americans that the economy is improving.
The stock market isn’t buying into this positive picture though. All three major indices – the Dow Jones Industrial, S&P 500, and Nasdaq – all sank deeper in the red following the release of the jobs numbers.
Forbes reports:
The Bureau of Labor Statistics released a significantly weaker than expected August jobs report Friday morning.
…
“The number was a surprise and a disappointment but we do not believe that it indicates a slowdown in the US economy,” wrote Joseph Lake, U.S. analyst for The Economist Intelligence Unit, in a note on the report. He added that there is a “reasonable chance” the number will be revised up as other economic data has shown strength in recent month. (For example, last week the Bureau of Economic Analysis increased its estimate of real gross domestic product for the second quarter to 4.2%.)
Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School and director of its Center for Human Resources, agreed in a phone call Friday morning that the number is likely to be revised as new data comes in…
Nevertheless Cappelli called the numbers “worrying” as they reflect a downward trend throughout the summer…
The labor force participation rate was down from 62.9% to 62.8%, which Orlando and Cappelli noted accounts for the drop in unemployment rate and shows that number is declining for the wrong reasons. At 59% the employment-population ratio had remained unchanged for three months.
The unemployment rate for young people fell but like the national rate it has more to do with people dropping out of the labor market then finding work. And some of that makes sense. August is the time of year that high school and college students resume their education so they wouldn’t be looking for summer work. Recent graduates who’ve been unsuccessful also return to higher education to pursue post-grad degrees.
According to Generation Opportunity's monthly jobs report, the effective unemployment rate for 18-29 year olds fell one tenth of a percent to 15 percent. (In full disclosure, I work for GenOpp). However, it’s because more young discouraged workers have dropped out of the job market – some 19.4 million young people in total.
When you dig deeper, you see that the employment picture continues to be dim for young Hispanic and young black people. Nearly one quarter of black 18-29 year olds and 15.8 percent of Hispanic young people are unemployed (including those who have given up looking for work). These numbers have barely budged each month except as more young people stop looking for work. This will undoubtedly have a retarding impact on the career impacts and future growth of my generation.
What is Washington’s answer? Politicians don’t have a good answer, but they do have policy agendas that they unswervingly cling to, which harm – not help- the economy such as raising the minimum wage rate. The President raised the federal minimum wage rate for contractors and hopes to spark Congress and states to follow suit.
At the state and local level, lawmakers are regulating new innovative enterprises that disrupt current industries such as ridesharing, food trucks, and supper sharing networks. At the bequest of established taxi, hotel and restaurant associations, lawmakers aim to stamp out enterprises like Airbnb, Uber, and Lyft which tend to be owned and driven by young people.
What we don’t need is to scare business from creating jobs because it becomes too costly to add an additional worker. We also don’t need policies that quell innovation and business. Our economic future is at stake.