Behind the cheerful spin the Labor Department and government talking heads put on the official monthly jobs data is a sobering reality: a more-realistic unemployment rate is probably closer to 10 percent and a wide swatch of the American public remains out of work.
Friday's report sketched a picture of a resilient job market that likely keeps the Federal Reserve on track to raise interest rates when it meets next month.
Yet the economy remains pocketed by weaknesses that have left many feeling left behind on the eve of Election Day. Job gains have been steady, but pay raises have only recently become widespread. And millions of Americans are working part time but would prefer full-time work.
In October, the unemployment rate dipped to 4.9 percent from 5 percent.
Economists look past the official unemployment rate — that 4.9 percent figure, also known as the "U-3" rate — to other metrics that give their own nuanced view of jobs in the country, CNBC explained.
The alternative gauge of joblessness, the U-6 rate, that
counts not only the officially unemployed but also the
part-timers who'd prefer full-time work and people who have
stopped looking for jobs, fell to 9.5 percent. That's the
lowest point since 2008. Still, it is higher than is typical
in a healthy economy.
"The official unemployment rate is defined as "total unemployed, as a percent of the civilian labor force," but doesn't include a number of employment situations in which workers may find themselves. The U-6 rate is defined as all unemployed, plus "persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of a labor force," CNBC explained.
"In other words: The unemployed, the underemployed and the
discouraged. The U-3 rate has in the past few months
returned to the prerecession levels that economists consider
full employment. While the U-6 has seen significant gains in
the past few years, it remains stubbornly above prerecession
levels," CNBC.com explained.
Meanwhile, CNS News reports that "94,609,000 Americans aren't in the labor force, 425,000 more than last month's 94,184,000, and the second highest number on record."
The labor force participation rate, which indicates the share of working-age people who are employed or looking for work, slipped to 62.8 percent from 62.9 percent, as the number of people in the labor force declined. In other words, 62.8 percent of the non-institutionalized, civilian population over the age of 16 is either employed or are actively looking for work, while the other 37.2 percent is not working or even looking.
"When George W. Bush took office in January 2000, 69,142,000 people were not in the labor force, and when his two terms ended, the number had grown to 80,380,000," CNS reported.
"The recession inherited by President Obama and mounting
baby boom retirements are among the factors continuing
to push the number up. When President Obama took office
in January 2009, 80,529,000 Americans were not in the
labor force, and that number has steadily risen during
his two terms to its current 94-million level. The
number reached a record 94,708, 000 this past May."
Bloomberg News reported that some economists and policy makers claim that the U.S. economy is close to full employment, blemishes remain, with the ranks of part-time workers and long-term jobless still higher than before the last recession.
The government’s underemployment rate dropped to 9.5 percent in October from 9.7 percent, while the number of people working part-time for economic reasons was little changed, according to Friday’s report. Some 5.89 million American employees were in part-time jobs but wanted full-time work.
The New York Post's John Crudele bluntly points out
that the monthly jobs data — and not the ballot box — is
where Republicans should be looking for an election rig.
"If any trickery occurs, it will likely be in the
seasonal adjustments, which can always be
corrected at a later date and in the birth/death model
that the Labor Department uses to guess at the number of
jobs created by “newly born” companies that it can’t
prove really exist,"
Crudele wrote.
Meanwhile, fewer teenagers worked or were looking for work last month. That trend reduce the proportion of Americans in the workforce, which is defined as people who either have a job or are actively seeking one.
But Americans in their prime working years — ages 25 through 54 — extended a recent trend of returning to work, perhaps drawn by rising pay. More than 78 percent of people in that age bracket now have jobs, the highest proportion since November 2008, in the midst of the Great Recession. Still, that's down from 80 percent before the downturn.
Despite last month's progress, the economy is growing at the slowest pace of any in a recovery since World War II. Growth picked up to a 2.9 percent annual rate in the July-September quarter, the government has estimated, much faster than the 1.1 percent pace for the first half of the year.
But most analysts foresee only modest expansion in the October-December quarter, leaving growth at an anemic rate of about 1.8 percent for all of 2016.
Hiring in October was led by professional and business services, a category that includes mostly higher-paying jobs in engineering, accounting and information technology. Those companies added 43,000 jobs, followed by health care providers, which gained 39,100.
Yet many companies are shedding workers. Manufacturers cut jobs last month, as did retailers despite October being the month where stores usually ramp up for holiday shopping. Both are factors that could weigh on economic growth this year.
"It's not a uniformly positive report," said Jason Schenker, president of Prestige Economics. "There is some patchiness to it."
Consumers — the U.S. economy's primary fuel — are showing some staying power, even though their spending slowed in the July-September period. Consumer spending did rise at a robust pace in September alone.
Much of that spending was on higher-priced items, including cars and homes. Auto sales are running close to last year's record high of more than 17 million. And while home sales have leveled off this year, they have done so at a nearly healthy level of 5.5 million.
Businesses, though, have been cutting their spending on machinery, computers and other equipment. They have reduced such spending for the past four quarters — the longest such stretch since the recession officially ended in mid-2009.
(Newsmax wire services the Associated Press, Reuters and Bloomberg News contributed to this report).
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