The headlines in today’s job report were gloomy:
- Nonfarm payrolls fell by 467,000 in June, more than expected and more than in May.
- The unemployment rate increased to 9.5%.
That gloominess is confirmed if you look deeper into the numbers. Most striking is the continued decline in the number of hours logged by private sector workers. The average workweek fell to 33.0 hours in June, the lowest since BLS began tracking the data in 1964.
The economy is thus losing jobs and, for the jobs that remain, is losing hours worked. That double whammy is bad news for the economy.
The following chart shows year-over-year changes in BLS’s index of total private sector hours worked (by production and nonsupervisory workers, who make up the bulk of the workforce). This index is useful because it captures both the number of jobs and the number of hours worked:
As you can see, the recent decline in private hours worked is sharper than any in the past forty years. Over the past twelve months, total private hours have declined by 7%.
A closely related issue is the rise in part-time employment for economic reasons. As I mentioned last month, the BLS publishes a variety of measures of “unemployment” in addition to the headline measure (known as U-3). My favorite is the U-6, which includes discouraged workers and workers who are working part-time because they can’t find a full-time position. Technically, that latter group of workers isn’t unemployed, which is why I put unemployment in quotes earlier (I welcome suggestions for a pithy name for U-6). With that caveat, the following graph shows that U-6 unemployment has now risen to 16.5% of the workforce:
Bottom line: The June jobs report confirms that we still have rising unemployment and rising under-employment.