The Hole Gets Deeper as Private-Sector Jobs Gap Widens
I made the following statement based upon the recent release of the Employment Situation Report for July 2015 by the Bureau of Labor Statistics (BLS), which reported an increase of 215,000 nonfarm payroll jobs (210,000 in the private sector) and that the unemployment rate was unchanged at 5.3 percent. BLS also reported that the labor force participation rate was unchanged at 62.6 percent, the lowest level since October 1977
It’s bad news that the Obama recovery’s private-sector jobs gap got bigger, not smaller. President Obama needs to work with Republicans in Congress to grow the economy instead of growing the federal government.
- Private-sector Jobs Gap. Compared with the average of other post-1960 recoveries lasting more than one year, the private-sector jobs gap rose to 5,772,000. Compared with the Reagan recovery of the 1980s, the gap stands at 12,577,000 – a new high.
- Closing the Gap. Eliminating the Obama recovery’s private-sector jobs gap compared with the average of post-1960 recoveries by the end of 2016 would require the addition of 467,000 private-sector jobs in each of the next 17 months. Closing the gap compared with the Reagan recovery would require 921,000 private-sector jobs in each of the next 17 months.
- At This Pace. Private-sector job gains have averaged 209,000 over the past six months. At that pace the private-sector jobs gap would be reduced by 24 percent (1,358,000) to 4,387,000 by the end of 2016.
- Labor Force Participation Rate. The labor force participation rate was unchanged at 62.6 percent, the lowest since October 1977 when the labor force participation rate was 62.4 percent.
- Employment-to-Population Ratio. July’s employment-to-population ratio was unchanged at 59.3 percent. At 59.3 percent, the employment-to-population ratio is once again below where it stood when the recession ended in June 2009 and significantly worse than the 62.7 percent in December 2007 when the recession began.
- Unemployment Rate. The unemployment rate would be 9.7 percent if the labor force participation rate was at the level it was when President Obama took office (65.7 percent).
Revisions to GDP and Personal Income. On Thursday, July 30, the Bureau of Economic Analysis (BEA) revised real GDP lower in its annual benchmark revision. The changes along with new data ballooned the Obama recovery’s growth gap compared with an average recovery to $1.9 trillion (2009$). On Monday, BEA followed suit and reduced past estimates of real disposable personal income per capita. Those changes and new data raised the real annual per person after-tax income gap to $3,549 (2009$).