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Tea Leaf: More jobs, less recession risk

Published: Wednesday, Oct. 12 2011 1:50 p.m. MDT

 The number of people out of work for more than 26 weeks rose by 208,000, to 6.24 million.

 The "underemployment" rate, which includes the unemployed, those working part-time who would prefer to work full-time, and those discouraged workers who have stopped seeking a job but would take one if offered, rose to 16.5 percent, the highest level this year.

 Average hourly earnings for all employees on private non-farm payrolls rose by four cents (0.2 percent) to $23.12. The rise of 1.9 percent during the past 12 months is just one-half of the 3.8 percent rise in consumer prices during the past year, leading to further strains on consumer spending.

 Better news saw the average workweek rise by 0.1 hours to 34.3 hours. While seemingly inconsequential, it equates to the addition of another 140,000 jobs within the economy.

Other breakdown

The unemployment rate for adult men dipped to 8.8 percent in September from 8.9 percent the prior month. The unemployment rate for adult women rose to 8.1 percent in September from 8.0 percent in August.

The unemployment rate for teenagers declined to 24.6 percent in September from 25.4 percent in the prior month. Still, with one out of every four job-seeking teenagers out of work, their ability to build critical workplace skills is severely diminished.

The jobless rate for whites was unchanged at 8.0 percent. The jobless rate for blacks or African Americans declined from 16.7 percent to 16.0 percent ... but such a level is way too high. The jobless rate for those of Latino or Hispanic ethnicity remained unchanged at 11.3 percent.

Education connection?

Anyone questioning the value of education in the workplace need look no further. The unemployment rate for those with less than a high school diploma was 14.0 percent in September, while the rate for high school graduates with no college was 9.7 percent.

The unemployment rate for those with some college or an associate degree was 8.4 percent, while the unemployment rate for those with a bachelor's degree or higher was a low 4.2 percent.

Policy matters

An editorial in the Oct. 8, 2011, issue of The Wall Street Journal noted the slightly better prospect for the economy with the release of the September jobs data. However, it also drew a contrast.

The editorial noted, "As it happens, the biggest one-month jobs gain in American history was at exactly this juncture of the Reagan Presidency, after another deep recession. In September 1983, coming out of the 1981-82 (economic) downturn, American employers added 1.1 million workers to their payrolls, the acceleration point for a seven-year expansion that created some 17 million new jobs."

"The difference between then and now isn't the magnitude of the recessions but the policies the U.S. pursued to restore growth. In the Reagan expansion, spending and tax rates were cut, regulations were eased, and government was in retreat. Today, we've had a spending and regulatory boom, the threat of higher tax rates, and a general antibusiness political climate. Policies have consequences."

... "Policies have consequences."

Jeff Thredgold is the chief economist for Zions Bank and founder of Thredgold Economic Associates, a professional speaking and economic consulting firm. Visit www.thredgold.com.

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