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Another Disappointment: No Net Jobs Added in August, Unemployment Steady


Job seekers speak with recruiters at an April jobs fair in New York City.(Spencer Platt/Getty Images)

Labor Day weekend is off to a discouraging start for, well, laborers.

The United States added no jobs overall in August and unemployment held steady at 9.1 percent, revealing a stalled labor market.


Economists predicted the report would show a modest gain of about 75,000 jobs, with the unemployment rate holding steady at 9.1 percent. It takes about 125,000 new jobs per month to keep the unemployment rate steady, according to several economists. An increase of 200,000 jobs per month would bring the rate down a percentage point over a year.

The reports for June and July were also revised downward to 20,000 and 85,000 jobs, respectively, indicating that the labor market was weaker than previously thought.

In more gloomy news, the length of the average workweek fell by 0.1 hour to 34.2 hours, a sign that hiring is unlikely to pick up soon. Average hourly earnings also fell, which could dampen future consumer spending. The civilian labor force participation rate, which measures people who are working or are looking for work, was little changed from July’s disappointing reading of 64.3 percent.


The Labor Department’s monthly report will set the stage for a fall in which the White House, Congress, and Federal Reserve try to find ways to boost the struggling job market.

Friday's bad news contrasted with a sunnier White House report a day earlier that predicted unemployment would drop to 8.3 percent in 2012. That forecast came in a mid-session review of the budget. An “alternative forecast” in the same report, which takes into account the summer’s volatility, is less optimistic, predicting that the rate will remain at 9 percent next year. Both forecasts expect the unemployment rate to reach 5.2 percent by 2018.

The Obama administration was disappointed by the report, blaming the Verizon strike and the government dysfunction on display during the battle over the debt ceiling. “Certainly this report was not what anybody would like to like to see,” said Gene Sperling, director of the president’s National Economic Council. “Without the Verizon strike, we probably would have seen over 60,000 private sector jobs created. But even then, that is not nearly the type of job growth this president feels we need to get workers back,” he said on MSNBC.

The grim numbers raise the stakes for President Obama’s address to Congress on Thursday night and make the need for bipartisanship even more critical, Sperling said. “This only validates that we need to put real, meaningful bipartisan action on the economy ahead of the politics and partisanship that is holding us back,” he said. “And the uncertainty and the division we saw over the summer, unquestionably, was a negative drag on the economy.”


Sperling also defended the administration’s stewardship of the economy over the last three years. “This announcement does not largely impact our view of what was needed,” he said. “On one hand, we have seen over a million private-sector jobs created in 2011. That is a quicker creation of private-sector jobs than we saw after the last recovery. But even before this announcement, the president knew that we still needed to do more in the short-term.”

Katharine Abraham, a member of the White House’s Council of Economic Advisors, downplayed the negative report and stressed that the economy has added 2.4 million private-sector jobs in the last 18 months. “The monthly employment and unemployment numbers are volatile, and employment estimates are subject to substantial revision.… [I]t is important not to read too much into any one monthly report,” she said in a statement.

Heather Boushey, senior economist at the liberal Center for American Progress, echoed the call for congressional cooperation. “I think what is gut-wrenching about this crisis is there are things that the president can do, that Congress can do, that would change this outcome,” she said.

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The Federal Reserve will look closely at August’s jobs numbers as it heads into its next meeting, scheduled for Sept. 20-21. At its August meeting, the policymaking Federal Open Market Committee discussed -- but did not commit to -- a number of ways to boost the economy, including another round of asset purchases, shifting its bond holdings into longer-term securities, and reducing interest rates paid on excess reserve balances. Friday’s disappointing report increases the likelihood that the Fed will act. 

President Obama will introduce job-creation initiatives in a speech next Thursday. The address will include ideas Obama has supported before, such as an infrastructure bank and measures targeted at the long-term unemployed, in addition to new proposals.

“Today’s unemployment numbers are a painful reminder that America still awaits economic leadership from President Obama,” Republican National Committee Chairman Reince Priebus said in a statement. Preibus called the administration’s regulatory policies “the biggest roadblock to job creation.”

House Republican Conference Chairman Jeb Hensarling, R-Texas, reiterated the call to cut back government spending, taxation, and regulation. “As long as the president stands in the way of policies that will grow the economy and bring job creators confidence, there simply won’t be enough jobs for American workers to replace all the millions that have been lost,” the Texas congressman said in a statement.

Markets opened lower on Friday after the report’s release. The Dow Jones industrial average fell 245 points in early trading with all 30 stocks lower. Markets may respond more positively than expected to the bleak news, however, because a bad jobs report increases the likelihood of further easing from the Fed.

This is the first time a jobs report has come in at zero since February 1945, according to CNBC.

George Condon contributed. contributed to this article.

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