The Real Unemployment Rate – August 2021
Bottom Line: After several months of sluggish job gains, Friday’s jobs report finally delivered. Over the prior two months the biggest improvement was seen with those who’d not been counted by the base unemployment rate. Last month’s storyline was certainly about the headline numbers. That’s because nearly a million people went back to work despite the summer surge of COVID-19 cases. It’s evident that the 26 states including Florida, which dropped the extended unemployment benefits in June, had a profound impact putting people back to work in July.
That’s encouraging news going forward as well. As for a few headline numbers...
- Unemployment rate 5.4% (down .5%)
- +943,000 jobs
- Positive revisions from previous months totaling 119,000 jobs
The positive revisions from prior months were huge and they were positive as well providing a net of more than 1 million jobs added and accounted for in July which is the kind of growth we’d been looking for, for several months given the record job openings we’ve had since Spring. The reported base rate and the real unemployment rate are two separate things... The real unemployment rate once underemployed, long-term unemployed and marginally attached people are accounted for looks like this:
- Actual: 9.2% (down .6%)
The real unemployment rate dropped by a bigger percentage than the base rate indicating across the board progress within the labor market. There are currently 9.8 million people who are long-term unemployed, underemployed or marginally attached to the workforce which makes up the difference between the base rate and the real rate. That’s an improvement of 600,000 over the prior month.
As for Demographics...
- Unemployment rates fell for all demographics except Asians
As for Money...
- The average hourly wage rose by 11 cents per hour during the month to $30.54
- The average full-time income is currently $55,265 an increase of $411 over the prior month
The near across the board demographic progress, the size of the job's gains – along with strong wage gains are all extremely encouraging. It’s about as good of a report as we could hope for. This does point to a likely continued trend of inflation pressures however, and that’s something we’ll have to reconcile for sooner than perhaps some think we will. July proved to be an outstanding month for employment and there’s reason to remain optimistic going forward as well.