The official unemployment rate dropped to 6.1 percent in August, but that masks weakness in the labor market, says Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and former chief economist to Vice President Joe Biden.
"There are at least two special factors that are distorting the unemployment rate's signal," he writes in
The New York Times.
"First, there are over 7 million involuntary part-time workers, almost 5 percent of the labor force, who want, but can't find, full-time jobs."
Second, the labor force participation rate stood at only 62.8 percent in August, matching a 36-year low.
Another issue is wage growth. Average hourly earnings rose only 2.1 percent in the 12 months through August.
"The persistently slow growth of wages in recent years is Exhibit A in the case for slack [in the job market]," Bernstein says.
"You would expect the unemployment rate to correlate negatively with wage growth: tighter job market, faster wage growth," he notes. However, "labor force inactivity correlates consistently with wages, implying that a significant share of those who've left the labor force are adding to existing slack."
Bottom line: "there's more slack in the American job market than you'd glean from the unemployment rate alone," he writes. "Some of those who've left the labor market would come back if the jobs were there."
Meanwhile, jobless claims unexpectedly fell by 8,000 to 287,000 in the week ended Sept. 27.
"The low level of layoffs indicates demand for workers is solid," Guy Berger, an economist at RBS Securities, tells
Bloomberg. "The economy in incrementally improving and employers want to hold on to workers and potentially add more."
Complete September jobs data will be released Friday, with non-farm payrolls expected to increase 215,000.