With Obama backers celebrating and others crying "foul," the article by Gene Epstein titled "September Unemployment: No U Turn" on Page 5 of the Oct. 8 "Economic Beat" section of the BARRON's (The Dow Jones Business and Financial Weekly Vol. XCII No. 41) explains the Bureau of Labor Statistic's release of the unemployment rate falling from an August 8.1 percent to 7.8 percent.
The three-tenths of a percentage point decline in joblessness was not an unalloyed triumph. The BLS tracks six different measures of "labor underutilization" of which the official unemployment rate, called "U-3," is but one measure. Normally the trend in the other five measures adds very little information that is not already observable in "U-3."
September 2012 was an exception. Another measure, "U-6," includes everything in "U-3" and then some; and it held firm at 14.7 percent. That's because this broader measure of labor underutilization includes people who work part-time but would prefer full-time jobs. The number of these involuntary part-timers jumped by 582,000 in September 2012, about offsetting the decline in "U-3."
No great shakes was the addition of non-farm payroll employment of 114,000 in September with government adding 10,000 and the private sector 104,000; in this sector gains averaged 121,000 in the recent quarter. With respect to employment, we are still climbing out of a valley with more than 4.15 million fewer private sector jobs than in January 2008. At the recent rate of monthly gain of 121,000, it will take until August 2015 to exceed the number of jobs held in January 2008.