According to statistics released Friday by The Bureau of Labor Statistics (BLS), 96,000 jobs were added to the U.S. economy in August – a “worse than expected” showing, especially in manufacturing, notes Wharton management professor Peter Cappelli. The jobless rate dropped slightly from the previous month, from 8.3% in July to 8.1% in August.
“The unemployment rate fell because more job seekers have given up and withdrawn from the labor market,” Cappelli states. The labor force participation rate declined in August to 63.5% from 63.7% in July. “Manufacturing was surprisingly weak, and it could be that the recent fall of the euro against the dollar had some effect on that,” he adds. “The only good news out of these numbers is that public sector job losses have slowed.” In addition, August employment rose in food services and drinking places, professional and technical services, and health care.
The ADP National Employment Report – a measure of employment based on a subset of U.S. business clients – was published the day before and had offered more optimistic news – which only added to the disappointment regarding the BLS report, according to Cappelli. “Many people expected the numbers to be much better than they were, given that the jobs report from ADP, which is the second most important labor market estimate, showed that we had added 201,000 new jobs in August. The ADP numbers are based on 400,000 employers, so they are pretty good.”
Cappelli recently spoke with Knowledge at Wharton about the challenges for jobs seekers and employers, which he also addresses in his new book, Why Good People Can’t Get Jobs: The Skills Gap and What Companies Can Do About It. Wharton Digital Press and Cappelli are offering the ebook free for one week, from September 10-17, 2012, to stimulate discussion about the jobs crisis during the presidential election season.
At the recent Republican and Democratic conventions, job creation, unemployment and the economy featured prominently as key election issues. Indeed, a recent USA Today/Gallup poll reported that 90% of U.S. registered voters count the economy as extremely or very important to their vote in the presidential election. Unemployment, the federal budget deficit, and health care follow near the top of the list.
In the wake of what just about everyone describes as a lackluster BLS report, observers speculate that the numbers might encourage the Federal Reserve at its policy meeting this week to take action that will help stimulate job growth, including a new bond-buying program, according to an article Friday in The Wall Street Journal. “That is one reason investors, many eager for Fed action, appeared to take the jobs tally — which fell short of the roughly 125,000 many had expected — in stride,” the article stated. The Dow Jones Industrial Average on Friday closed at 13,306.64, up 14.64.
The Journal also noted that at a recent meeting of economists and central bankers in Jackson Hole, Wyo., Fed chairman Ben Bernanke “described the weak labor market as a grave problem — a strong suggestion that he wanted to take new measures to strengthen economic growth.”
Cappelli has some advice for jobseekers: “First,it’s not your fault if you didn’t find a job in August. It looks like there wasn’t much hiring. Second, given that business performance is still pretty good, there might be some pent-up hiring during the next month.”
During the interview with Knowledge at Wharton, Cappelli also noted that in this era of automated hiring systems, it is important to connect with “a real person” so that job applicants can explain to him or her what their relevant skills are, “in ways that may not be completely obvious from your resume. It always helps to put yourself in the shoes of hiring managers who understandably want to minimize their risk – and find somebody who is really motivated to do the job. See if you can make that case to them.”