Though the headline number missed the average estimate, here are 5 reasons the August jobs number was actually quite good:
1) July's payroll number was revised up by 30,000 and the two month jump is 44,000 jobs.
2) The unemployment rate fell to 5.1%. It declined across many categories and remarkably is now just 2.5% for those 25 years or older who have a 4-year college degree.
3) The duration of unemployment was down across all categories from this time last year.
4) The number of "discouraged workers," (those who stopped looking for a job), fell considerably from last year.
5) The gain in jobs was broad-based, across nearly all sectors. Oil & gas, what the government calls "mining," was again the big drag. The oil slide has cost us nearly 90,000 jobs since December. Sadly, that is likely to go higher.
These 5 reasons are also why I believe the Federal Reserve will raise interest rates this month for the first time in nine years.
On the flipside, of the two negative data points that bring the bears, one may not be entirely what it seems.
First, the biggest negative: many jobs being created are either part-time, lower wage, or both. This is true, and perhaps the biggest problem the economy still faces. As I've said, America needs to decide what we want to be: an economy where goods are made here, maybe cost a little more, but bring higher income to those who make the goods. Or a culture of cheap goods and low wages. We can't be one without the other. Without pricing power, there is little wage power. Can anyone point me to a nation where the cost of goods production is low but salaries to make those goods are high? I can't think of one. If it exists, please let me know. More bluntly: we consumers can help drive income by spending a little more on products made by our neighbors.
The other big negative the bear camp points to is the low labor force participation rate. The percentage of working age adults who have jobs has fallen for years, and is now at its lowest level since 1977. Many take this to indicate the job market is actually so weak tha many have given up and permanently dropped from the workforce because there are simply no jobs. Surely there is some truth to that. Available, good jobs still are hard to find in many parts of the country.
But like nearly everything with economics and finance, another argument can be made.
First, let's remember that there are also still more than 5 million open jobs in America, the highest in years, so it is simply not true to say participation is low because of a lack of jobs.
Next, let's also remember to look at history for context. Yes, participation is back to 1977 levels, but it had been lower for decades prior to the disco era. This chart comes via the BLS: