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The Real Unemployment Rate – September 2021
Bottom Line: Expectations were running high heading into Friday’s jobs Report. After the biggest gains of the year were posted in July, hopes for follow through in August were there. It didn’t materialize. The warning signs were there in advance. The ADP private sector jobs report showed lackluster growth last Wednesday and that translated into the government’s report as well. There’s always far more hiding beneath the surface of the headline numbers than not so we’ll dig in. Starting with the headline numbers.
- Unemployment rate 5.2% (down .2%)
- +235,000 jobs
- Positive revisions from previous months totaling 134,000 jobs
The first positive comes into play with the revisions. The government found they’d undercounted for 134,000 jobs added during prior months bringing the net jobs number to 369,000 – or right in line with the ADP number. As for the rest of the story... 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: 8.8% (down .4%)
The real unemployment rate dropped by a bigger percentage than the base rate indicating progress with those missed by the reporting of the base unemployment rate. There are currently 9.3 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 500,000 over the prior month and is the big storyline in this report. We’re making the biggest gains in employment with those three groups of would-be employees.
As for Demographics...
- The unemployment rate improved for Whites while essentially flat for all other demographics
As for Money...
- The average hourly wage rose by 17 cents per hour during the month to $30.73
- The average full-time income is currently $55,449 an increase of $184 over the prior month
Wage inflation continued positively impacting the incomes of those full-time employed as we ended the month with record high average annual incomes. While the headline numbers were disappointing, the story beneath the headlines was positive. The biggest gains in employment have most recently been made by those who’re long term unemployed and those who’ve been struggling to gain regular employment. With the end of the federal employment benefits this weekend, there’s reason to think we could be setup for a big month of hiring in September. Especially as companies begin to ramp up hiring for the holidays.