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Employers added 169,000 jobs in August; rate falls to 7.3 percent

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By Thomas Olson
Friday, Sept. 6, 2013, 9:24 a.m.

Breon Roberts of Avalon has been looking for a job in the logistics or transportation industry for the past month since being laid off by a Department of Defense contractor.

“So far, it's been slow,” said Roberts, 34, while waiting in an employment services office Downtown for help in obtaining a commercial driver's license.

Roberts, an Army veteran, has lots of company. Roughly 11.3 million Americans were out of work in August, the U.S. Labor Department reported on Friday. The report said the nation's employers added a mildly disappointing 169,000 jobs last month.

Despite a drop in the unemployment rate to the lowest level in almost five years, the report paints a dreary picture of the job market. It indicates that hiring is sluggish and many people are giving up on their search for work out of frustration, skewing the unemployment rate.

“At the rate we're going, we won't get back to a healthy labor market until the end of the decade,” said Heidi Shier­holz, an economist at the Economic Policy Institute.

The report provided some comfort to investors because it could discourage the Federal Reserve from paring its $85 billion in monthly bond purchases to fuel economic growth by keeping interest rates low. Investors and economists have worried that if the Fed hits the brake too soon or too aggressively, it could derail the economic recovery.

“This gives the Fed cover for no major change in policy,” said Antony Davies, associate professor of economics at Duquesne University. “It's loathe to increase interest rates because it runs the risk of pushing us back into recession.”

Jobs were added in retail, health care and professional and business services, as well as in leisure and hospitality. But employment was little changed for most other sectors, including a meager 12,000 added in the transportation/warehousing industry Roberts hopes to join.

“Job growth has been mediocre everywhere since the Great Recession,” which ended in mid-2009, Davies said.

Pittsburgh-area job growth over the past four years has been mediocre, he said. But the slow pace of job creation “means less” here because Western Pennsylvania was “never in as deep a hole” as the nation in the recession.

The Pittsburgh region, which posted a 6.7 percent jobless rate in July, according to the most recent data, lost proportionately fewer jobs than the nation during the recession. That's because of the local economy's concentration on education and health care employment, which avoids wild swings when the overall economy plunges or rebounds.

Gus Faucher, senior economist at PNC Financial Services Group, said other industries in this region — such as manufacturing, financial services and law — are more susceptible to the cyclical ups and downs.

Many economists have expected the central bank to taper its monthly purchases when it meets Sept. 17 and 18. Friday's data may lead the Fed to slow its bond buying more gradually than it might have otherwise to keep interest rates from spiking too sharply and quickly.

Although U.S. job creation was weak last month, the unemployment rate declined to 7.3 percent from 7.4 percent in July and 8.1 percent in August 2012, the Labor Department reported. The headline rate had not been at 7.3 percent since December 2008.

“But the rate dropped for the wrong reason,” said Shier­holz, of the Economic Policy Institute. “It dropped because people either dropped out of the labor force or never entered the labor force, not because a higher share of the labor force got jobs.”

When people stop looking for work, they are no longer counted as part of the labor force, artificially lowering the unemployment rate.

Teenagers recorded perhaps the worst unemployment rate last month at 22.7 percent. And that was an improvement over 23.7 percent in July and 24.5 percent in August 2012.

Shierholz said more relevant than the jobless rate to the state of the labor economy is the labor force participation rate — the share of the working-age people with a job or actively looking for one. That rate was 63.2 percent in August, the worst in 35 years.

People of working age drop out for many reasons: Retiring early, inability to find a job or going back to school full-time. Last month, 315,000 Americans left the labor force.

“The labor force shrinking has been a chronic problem since the Great Recession,” Davies said.

The government revised June and July job gains by a combined 74,000, bringing monthly job gains down to an average 148,000 in the past three months, much lower than the 12-month average of 184,000.

Staff writer Alex Nixon contributed to this report. Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or

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