Unemployment rate falls as more than 300,000 give up looking for work
Labor Force Participation Rate drops to 35 year low
San José, CA – On Sept. 6, the Labor Department announced that the official unemployment rate dropped to 7.3% in August, down from 7.4% in July. But even though 110,000 fewer people were working in August than July, 310,000 people gave up looking for work and were no longer counted as unemployed. The Labor Force Participation Rate, or the fraction of the adult population who are either working or looking for work, fell to 63.2%, the lowest since August 1978.
Hardest hit were African Americans. Not only was their official unemployment more than twice that of whites (13.0% vs. 6.4%), but the drop in their Labor Force Participation Rate of 0.6% to only 60.8% was twice that of whites, whose Labor Force Participation Rate fell 0.3% to 63.4%.
Overall, there are still over 2 million fewer people with jobs than when the recession began in December of 2007. Even though the economy has been growing for more than four years since the recession officially ended in June of 2009, it has not been fast enough to bring back all of the lost jobs. In addition, almost half of the new jobs being created are in low-paying industries such as retail and hotel and restaurants.
In 2012 the share of national income going to wages, salaries and benefits was only 50.3%, the lowest since 1950. At the same time the share of income going to profits, interest and rent rose in 2012 to 40.4%, the highest since 1948. Corporate profits are at all time highs, as businesses reap the benefits of fewer workers producing more goods and services, while wages and benefits have not gone up.