Last Friday's household survey showed the unemployment rate dipping to 5.4 percent in August, which isn't bad by historic standards. But last Friday's payroll survey showed that employers created only 144,000 payroll jobs in August, which is pretty awful given that the economy needs at least 150,000 just to keep up with new workers coming into the labor market. So the obvious question: Do we have anything to celebrate this post Labor-Day week?
Well, let's take a closer look. The more upbeat household survey is compiled every month by a team of surveyors from the Bureau of Labor Statistics who visit a random sample of 60,000 homes around country, and ask: "are you working?" If the answer they get is "no," the next question is "are you looking for work?" Only if the answer to that second question is "yes" -- I'm looking for work -- is the person counted as "unemployed." This means that everyone who'd like to work but has given up looking because they've tried and can't find any work, is not included as being among the unemployed. There's the additional problem that some people who aren't working but are embarrassed to admit it will say they are.
The payroll survey, by contrast, asks a much larger and different sample -- 400,000 employers, who employ about a third of the entire workforce -- how many employees they've added over past month. No guesswork there. Just look at the payrolls. There's only one rub: The payroll survey doesn't include everyone who's become self-employed.
Now, this would be a problem if self-employment were a real alternative. But that's not what the evidence shows. A new research paper from the San Francisco Federal Reserve finds that the number of "self-employed" rises during weak economies and falls when people can find payroll jobs. In other words, being "self-employed" doesn't necessarily mean you're making enough money to live on. All it might mean is you can't find a payroll job and you're calling yourself "self-employed." No big surprise there.
Bottom line: Employers are still reluctant to hire. And it's not hard to figure out why. Demand for their goods and services remains soft -- because consumers, who are also workers, don't have enough money in their pockets or confidence in their jobs and paychecks to flood back into the malls.
Robert B. Reich is co-founder of The American Prospect.
