A Labor Day Report Card

Report Jobs and Labor

A Labor Day Report Card

September 3, 2004 3 min read

Authors: Rea Hederman, Alison Acosta Fraser and Tim Kane

As summer comes to an end, Labor Day offers us a moment to reflect on employment in America over the last year. The facts reported in the monthly Employment Situation report issued today by the Bureau of Labor Statistics (BLS) reflect a strong jobs market. In August, 144,000 new payroll jobs were created, payroll growth for previous months was revised up, and the rate of unemployment dropped to just 5.4 percent.


Look back over the last year, and the picture is even better. Since last Labor Day, every single month has seen an expansion of payroll jobs, totaling 1.7 million. Non-payroll jobs have grown even faster. Unemployment has consistently improved, dropping from a rate of 6.1 percent last August to 5.4 percent today. This is all the more remarkable because nearly 1.5 million people have entered the workforce over the last year. Even the beleaguered manufacturing industry added jobs. All in all, America can celebrate Labor Day knowing the jobs market is strong and growing.


Highlights for August 2004

  • The unemployment rate declined to 5.4 percent, after holding steady at a healthy 5.6 percent for most of 2004. August is the second consecutive month of improvement.
  • Since June, the labor force has expanded by 425,000 while total civilian employment has grown by 650,000, according to the BLS household survey.
  • Payrolls expanded by 144,000 in August, the twelfth straight month of growth.
  • Payroll job growth for two previous months was revised up, more than doubling the number of new jobs originally reported for July. This confirms the Federal Reserve's view of a soft summer and contradicts earlier impressions of weakness or renewed decline.
  • Manufacturing employment continues to expand, up 22,000 in August.

A One-Year Report Card



A One-Year Report Card



The one-year report card shows improvement in the U.S. labor market on all but one indicator. Payroll jobs have increased by 1.69 million, while total civilian employment is up 2.36 million. Contrary to claims that workers are leaving the labor force, the labor force has actually expanded by 1.48 million since last Labor Day. Average hourly earnings for non-supervisory workers are up 36 cents, but are slightly down if the Consumer Price Index is factored in. Perhaps the best news is the decline in the number of people unemployed for long durations, down by 337,000. Also, the average unemployment duration dropped slightly.


The last year has brought relief to the long-term unemployed. The number of workers who have been unemployed for longer than 15 weeks has dropped 17 percent in the last year, from 2.4 percent to 2.0 percent. The number of workers who have been unemployed for longer than 26 weeks has dropped by 17 percent, as well.


Over the last twelve months, alternative underemployment rates, which take into account discouraged and marginally attached workers, have received heightened scrutiny. These rates include persons who want a job but have not actively looked for one in the recent past. But the last year has seen a surge in the labor force, as well as an increase in part-time workers who do not want a full-time job. The result has been a significant decline in all measures of unemployment and underemployment. In August of 2003, the unemployment rate including discouraged workers was 6.4 percent. Today it stands at 5.8 percent. The unemployment rate that includes all marginally attached workers has dropped by from 7.1 percent to 6.4 percent.



Economists never make too much of one month's data, preferring instead to look at broad trends over a longer term. Focusing on the twelve months since last Labor Day, a clear picture of the improving U.S. economy emerges, especially in the broad pickup in employment statistics. The global economy has been improving, but America's expansion is pronounced. The U.S. unemployment rate reflects a healthy growing economy and remains far lower than European nations. All in all, this report card shows solid performance across the board.


Tim Kane, Ph.D., is Research Fellow in Macroeconomics, and Rea Hederman is a Senior Policy Analyst, in the Center for Data Analysis at The Heritage Foundation. Alison Acosta Fraser is Director of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.


Rea Hederman

Former Director, Center for Data Analysis and Lazof Family Fellow

Alison Acosta Fraser

Former Senior Fellow and Director of Government Finance Programs

Tim Kane