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USA Unemployment Rate Drops to 7.8%, 200,000 Jobs Added

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John Hunter

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The unemployment rate decreased to 7.8%, and total nonfarm payroll employment rose by 114,000 in September, the U.S. Bureau of Labor Statistics reported today. The change in total nonfarm payroll employment for July was revised from +141,000 to +181,000, and the change for August was revised from +96,000 to +142,000. Thus, with this report 200,000 new jobs were added (114,000 + 40,000 + 46,000).

The unemployment rate declined from 8.1% in August to 7.8% in September. For the first 8 months of the year, the rate held within a narrow range of 8.1 and 8.3%. The number of unemployed persons, at 12.1 million, decreased by 456,000 in September.

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 4.8 million and accounted for 40.1% of the unemployed. This remains one of the most serious problems – along with the less that strong job creation numbers (since the too-big-too-fail financial crisis kicked off the great recession). In 2012, employment growth has averaged 146,000 per month, compared with an average monthly gain of 153,000 in 2011. 150,000 is decent but because of the huge job losses in the 4 years prior to 2011 there is a big recovery needed. Adding above 225,000 jobs a month, for years, would be a good result and put the economy on much firmer ground.

Health care added 44,000 jobs in September. Job gains continued in ambulatory health care services (+30,000) and hospitals (+8,000). Over the past year, employment in health care has risen by 295,000.

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.5 hours in September. The manufacturing workweek edged up by 0.1 hour to 40.6 hours, and factory overtime was unchanged at 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.7 hours.

In September, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents to $23.58. Over the past 12 months, average hourly earnings have risen by 1.8 percent. In September, average hourly earnings of private-sector production and nonsupervisory employees increased by 5 cents to $19.81.

Related: Bad Jobs News in the USA, Unemployment Remains at 9.1% (Sep 2011) – USA Unemployment Rate at 9.6% (Sep 2010) – Unemployment Rate Increases to 9.7% (Sep 2009) – Over 500,000 Jobs Disappeared in November 2008

Comments

2 responses to “USA Unemployment Rate Drops to 7.8%, 200,000 Jobs Added”

  1. Jon Pues Avatar
    Jon Pues

    I am wondering how much the retiring baby boomers are starting to effect the unemployemnt numbers? In doing research I have found on at least on site that the jobs needed number of 150,000 – 200,000 per month needed to keep up with the new people entering the job market needs to be scaled down to 75,000-100,000 due to the retiring boomers. When checking the population figures it would appear at some point in the next couple of years the retiring boomers will equal the amount of people entering the job market.
    Thank you for taking a look at this.

    Reply
  2. John Hunter Avatar
    John Hunter

    Retiring baby boomers do take some people out of the job market. And in a bad economy, a number of people that are out of a job (but would be working if they didn’t lose the last job), just decide to retire early.

    When I last looked (about 2 years ago) the number needed to maintain was between 100,000-125,000. The USA still has lots of immigration and those immigrants are young, overall (which is one reason the USA doesn’t have as significant demographic problems as Europe and Japan do). My guess is the retirements are not going to reduce the job market needs below an average of 75,000.

    The largest reason for the drop in the unemployment rate is the drop in labor force participation of those between 20-65. It isn’t people retiring over 65 that is dropping the number of jobs needed to drop the unemployment rate it is those stil under 65 that have dropped out of the labor force (likely many will rejoin once jobs are available).

    There is also a big increase in those receiving disability benefits from the SSA that directly correlates with the bad job market. Obviously there are many legitimately disabled people. The data seems pretty clear that currently part of the labor force decline is in those claiming disability pay that would not be doing so in a better economy. We will likely see these numbers decline and those people rejoin the labor force once jobs are more plentiful.

    These additions to the labor force will require additional jobs (even though the population won’t increase). My guess is 125,000 is still a good long term estimate of the number of jobs we should add to sustain the labor market. The population is growing (largely due to immigration – both directly and then the immigrants having kids once they are here). Part of that growth is in the increase in those over 65. I’ll have to take a look at the 20-65 population growth projections – I believe it will be increasing but it will be interesting to check and see.

    Reply

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