7.4% Unemployment - The Lowest In Years

The Labor Department announced the official employment statistics for the month of July, and on the surface it looks like great news. The official unemployment rate has dropped to 7.4% -- that's 0.2% lower than the June rate, and the lowest rate since the economy blew up in the Bush recession.

But while it's good to see the official unemployment rate finally dip under 7.5%, I'm not at all sure it's something to be celebrated. That's because the number of new jobs created in July was only a fairly anemic 162,000 jobs -- barely enough to cover the number of new workers, and the lowest job creation number since May. That's not exactly indicative of a healthy economy (which would be creating well above 200,000 jobs a month), and in fact, economists recently announced the economy is only growing at an annualized rate of 1.7% (about half of the growth of a healthy economy).

So why did the unemployment rate fall last month. Both the size of the civilian workforce and the official count of the unemployed fell last month, and since that can't be accounted for by the small number of new jobs, it becomes obvious that many thousands more Americans gave up and stopped looking for work last month -- and that caused the unemployment rate to drop, since they are no longer being counted as unemployed by the government.

I'm sure the Republicans would like to blame our fumbling economy on President Obama, but the truth is that the GOP must take the lion's share of the blame. They have imposed a gridlock on Congress, and haven't allowed the president to even try to improve the economy. And they have taken money out of the economy with their drastic cuts -- which has depressed demand and slowed job creation. These GOP actions are lengthening the effects of the recession for most Americans.

Here is a demographic breakdown of official unemployment rates:
Adult men...............7.0%
Adult women...............6.5%
Teenagers...............23.7%
Whites...............6.6%
Blacks...............12.6%
Hispanics...............9.4%
Asians...............5.7%

And here are the relevant numbers for July:

Official size of the civilian workforce:

155,798,000

Official number of unemployed workers:

11,514,000

Official unemployment rate:

7.4%

Official count of workers marginally-attached to workforce, and are no longer counted as unemployed (because they haven't looked for work in the last 4 weeks) -- likely a big undercount:

2,414,000

Real number of unemployed workers (official unemployed + marginally-attached):

13,928,000

Real unemployment rate:

8.9%

Number working part-time because full-time work is not available:

8,245,000

Number of unemployed/underemployed workers (unemployed + marginally-attached + part-time):

22,173,000

Rate of unemployed/underemployed workers:

14.2%

And that is not all of the bad news. Most of the new jobs being created are low wage jobs. About 58% of the full-time jobs created in July were low wage jobs -- and this has been happening for many months now. With the stagnation of worker wages, this new replacing of good jobs with low wage jobs is causing the median worker wage in this country to drop -- and the middle class to shrink.

In addition to many of the new jobs being low wage, many of them are also part-time now. Businesses are replacing many of the full-time jobs lost in the recession with part-time workers (because they can pay low wages to part-time workers and deny them any benefits). These two trends put a pall on the new lower unemployment rate.