The latest employment report from the Department of Labor shows that the economy added 315,000 jobs in August, normally a healthy increase and a sign of a robust economy. Unfortunately, the devil is in the details, showing that the job market is picking up steam. The report, like the economy as a whole, looks good from a distance, but is far from good.
The first red flag in the report was revisions from the previous two months, which totaled 107,000 downwards. So about a third of the jobs added in August were jobs that we thought the economy already had.
While this headline number of jobs comes from a survey of companies, the unemployment rate and other details come from a survey of households, which also contained disturbing data. The household survey peaked in March and has never recovered to pre-pandemic levels. And while the overall employment rate increased in August, a healthy indicator, it fell for blacks, as did the number of blacks employed.
Another cause for concern is weekly earnings, which were stable in August. When those numbers are adjusted for inflation, real weekly earnings will be negative; that means workers are arguably poorer because prices are rising faster than incomes.
This stagnant weekly revenue is not surprising when we look at other data. Faced with enormous uncertainty, companies are hiring fewer full-time and more part-time employees. The number of full-time workers peaked in May and continued to decline in August. While wages are rising, the average work week continues to fall, so weekly earnings are still stable.
But there are even more problems under the hood. The company survey allows for double counting of some job holders, and there is significant evidence that double counting has recently gained momentum. For example, people with multiple jobs are counted for every job they have. Also, when someone switches from self-employment to working for someone else, that is counted as a new job, even though there is no net gain in employment.
As a result, of the 5.8 million jobs restored in the past year, about 1.3 million are double-counted. For August, the double count was about 208,000.
Taking this and the downward revisions from the previous two months into account, there were technically no jobs added in August.