U.S. Economy Adds 142k Jobs In August

The U.S. Bureau of Labor Statistics reported this morning that 142k nonfarm payrolls were added during the month of August. This follows revised payrolls gains of 212k in July and 267k in June.

NFP

A bulk of the August job gains came in the Professional Services and Education and Health Services industries.

Payrolls Industry

Along with Leisure and Hospitality, these 3 industries have contributed the most to the job gains over the last 8 years. Although Construction employment grew in August, it and the Manufacturing industry have had the most difficulty recovering from the economic downturn.

Industry Jobs Change

The household survey shows that 367k full-time jobs were added in August, while part-time employment decreased by 327k. Since November 2007 however, when the household survey showed peak employment, full-time jobs have decreased by 3.3 million and part-time jobs have increased by 3.0 million.

FTPT Change

Part-time employees made up 18.96% of the workforce in August, down from 19.18% in July.

Part-time Share

Those part-time for economic reasons, workers who would prefer to be full-time but are involuntarily part-time, as a share of those part-time for noneconomic reasons decreased to 37.3% from 38.2%.

PT Economic Reasons

The unemployment rate (U-3) was 6.1% in August, down from 6.2% in July. The broader underemployment rate (U-6) decreased to 12.0% from 12.2%.

Unemployment Rate

Youth unemployment continues to be volatile.

Unemployment Rate Age

Unemployment for those with a high school diploma or some college has increased in consecutive months.

Unemployment Rate Education

Blacks continue to experience the highest unemployment rate at 11.4%.

Unemployment Rate Race

The labor force participation rate was 62.8%, down from 62.9%, while the employment-to-population ratio was unchanged at 59.0%.

Labor Force Participation

Participation among men decreased to 69.2% from 69.3% and participation among women was unchanged at 56.9%.

Participation by Sex

The participation rate for prime age workers (25-54) increased to 81.1% from 80.8%.

Participation Rates Age

However, since the total participation rate peaked in August 2008, participation has only risen in the 55+ age bracket.

Participation Rates Change

Average weekly hours worked by production and supervisory employees were unchanged at 33.7, while average hourly earnings increased to $20.68 from $20.62. This increased average weekly earnings to $696.92, up 2.4% from a year ago.

Earnings Growth

Hours

Average duration of unemployment in August was 31.7 weeks, down from 32.4 in July and the high of 40.7 in 2011, but still elevated by historical standards.

Unemployment Weeks Duration

Of those unemployed, 46.8% have been so for 15 weeks or longer.

Unemployment Duration

Overall, this was not a great employment report as the number of job additions was low, but there were some silver linings: The new jobs were overwhelmingly full-time positions, the length of time people are staying unemployed is shortening, and labor force participation increased for prime age workers.

August Consumer Confidence

U.S. consumer confidence increased to a reading of 92.4 (1985=100) in August, as published this morning by The Conference Board. This compares to a revised reading of 90.3 in July, and is the highest consumer confidence has been since October 2007.

The Present Situation Index component increased to 94.6 from 89.7, while the Expectations Index component decreased to 90.9 from 91.9.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence increased for the fourth consecutive month as improving business conditions and robust job growth helped boost consumers’ spirits. Looking ahead, consumers were marginally less optimistic about the short-term outlook compared to July, primarily due to concerns about their earnings. Overall, however, they remain quite positive about the short-term outlooks for the economy and labor market.”

CB Confidence

The U.S. consumer sentiment index, reported by the University of Michigan, decreased to 79.2 in August from 81.8 in July.

Michigan Sentiment

The Conference Board’s index has been trending upwards in 2014 while the University of Michigan’s index has been relatively flat.

Consumer Confidence

One-Time Contributions To GDP

inside-coca-cola-amatils-production-facilities-1

GDP measures the new products or services provided in a specific window of time (e.g. the 3rd quarter of 2014, or all of 2013). If all the effort in producing a new product comes in development, but it is then copied for free, this means that there is a one-time contribution to GDP in the year it was developed, and then nothing afterwards.

Things like refrigerators, Diet Coke, and cars contribute to GDP every period because we have to make new versions of them over and over again. But in one sense that is a bug, not a feature. Imagine if, having invented Diet Coke, you could make copies for free. That would lower GDP, as Coca-Cola would drop to essentially zero revenue from here forward. But it’s demonstrably better, right? Free Diet Coke? Where do I put in the IV line?

Dietz Vollrath, Associate Professor of Economics at the University of Houston

The Breakdown Of Low-Wage Americans

There are roughly 21 million workers in the U.S. who earn between the minimum wage and $10 an hour, the NYT reports. The federal minimum wage is still at $7.25, but is higher in 18 states and the District of Columbia.

The breakdown of which Americans are making such low wages is shown below. About 40% of low-wage Americans are 35 or older, and 43% of low-wage Americans have been to college.

Low-Wage Americans

The U.S. STEM Graduation Rate Is Very Low Compared To Other Countries

The STEM (Science, Technology, Engineering, and Math) subjects of study are in high demand in the global labor market, and tend to pay well also. Thus, it is important for any nation wanting to maintain its wealth and to fuel growth to ensure that it is producing a sufficient number of professionals in the STEM fields.

McKinsey shows that in 2008 only 15% of U.S. college graduates received degrees in a STEM subject. This compares with a world average of 23% and 42% in China.

STEM Graduation Rates

Google Unveils Project Loon, Internet For All Via Balloons In The Sky

Google has unveiled Project Loon, a plan from their Project [x] division to bring internet to the entire world by carefully placing balloons 20 kilometers in the sky. Among many other benefits, Google explains how internet for all would good for global business, agriculture, healthcare, and education.

Project Loon is a network of balloons traveling on the edge of space, designed to connect people in rural and remote areas, help fill in coverage gaps and bring people back online after disasters.

The States That Spend The Most On Education

The U.S. Census Bureau has released some interesting financial data on education at the elementary and secondary school level.

The national average in 2011 for all states was spending $10,560 per student, down 0.4% from 2010.

Current US Spending Per Pupil for Public Elementary and Secondary School

The map below shows states color-coded by how much they spent per pupil on education for elementary and secondary school. The top spenders were New York ($19,076), the District of Columbia ($18,475), Alaska ($16,674), New Jersey ($15,968), and Vermont ($15,925).

US Public Elementary and Secondary School Spending Per Pupil by State

Spending mapped to display expenditures per $1,000 of income shows similar results, with West Virginia, Vermont, and Connecticut emerging as high spenders.

US Spending Per State on Education Per 1k Personal Income