Unemployment Report: It Just Ain't Labor's Day

Last Updated Sep 4, 2009 6:46 PM EDT

So the headline number on unemployment is 9.7%. That alone might be enough to send people into the last weekend of summer with the sense that the economy has a long winter ahead of it. But ugly as that 0.3 percentage point jump in the closely watched number is, a look behind it shows the reality is uglier still.
  • The decline in jobs wasn't as bad as the leap in the unemployment rate suggested-but that's not good news. Uncle Sam's payroll survey showed 216,000 jobs lost, which University of California, Berkeley's Brad DeLong thinks wasn't too terrible. There are two problems with this, however.
  • The first is, the headline unemployment rate leaped because many people who had been too discouraged to look for work came back into the labor force in August--drawn, no doubt, by the happier economic news of the summer--and found there still wasn't any work for them.
  • The second problem is, that 216,000 jobs lost per month is roughly the run rate of our two most recent recessions, as Arpitha Bykere, senior analyst of Nouriel Roubini's RGE Monitor, points out. The sole reason the phrase "only 216,000 jobs lost" doesn't sound deluded is that we were losing 600,000 jobs a month after Lehman collapsed a year ago. But judging just by these job-loss numbers, we're still in the middle of our labor recession.
  • The broadest figure for unemployment took a big jump to from 16.3% to 16.8%. This is the one that includes discouraged workers and those working part time because they couldn't find full time work. Atlanta Fed president Dennis Lockhart thinks this is the real unemployment number.
  • Hours worked went down Economist Clair Brown of U.C. Berkeley points out that today's unemployment numbers are artificially boosted by the number of people working reduced hours and sharing jobs-a recession-fighting tactic that American companies haven't used for decades. You can see the effect in the sharp drop in hours worked, particularly in the goods-producing sector, where they've gone from over 40 hours a week a year ago to just over 33 in August. When the recovery eventually comes, employers can just boost people's hours at first; they don't have to re-hire.
This all adds up to a heightened possiblity of a double-dip recession, an idea recently embraced by Morgan Stanly Asia head Stephen Roach as well as the perennially downbeat Nouriel Roubini. It also suggests that the recoery will be weak when it comes. Bykere talks about not just a jobless recovery but a "jobless, wageless recovery," a phrase I hope never has cause to become widespread.

Any silver lining? Well, Clair Brown says the "incredibly resilient" U.S. labor market will adapt. Eventually. But not for many Labor Days to come.

More on CBS MoneyWatch:

Labor Day Unemployment Report: If it's So Good, Why do I Feel Bad?
The Economy is Still Near the Bottom
Are the Unemployed Lazy?]