Ugly is only way to describe the August job report. Non-farm payrolls grew by an anemic 93,000.
And if you look under the hood at the new jobs, you find the greatest gains came from the food services and drinking sector. This means it was an OK month if you're looking to be a bartender or wait tables, but not much else.
But the big problem is 368,000 people gave up looking for work in August. This resulted in a workforce particaption rate of just 63.5% - the lowest in 31 years. The chart below, which is from a Washington Post article on this topic, shows the sharp decline that has occurred due to the recession.
The question is, where did all these people go? The Washington Post article says it's a combination of discouraged workers waiting out the recession and retiring baby boomers.
A recent study by the right leaning Heritage Foundation agrees with the Washington Post article, but also adds growing disability roles and an increase of people in school.
We agree with all of these reasons, but we're also starting to wonder what's going on in the U.S. informal economy. The informal economy is a nice term for businesses that are illegal, or choosing not to report income and pay taxes, or business activity done on a barter basis.
Our guess is it's growing.
For obvious reasons, there's not a lot of data on the informal economy. But given the steep decline in the number of Americans working in the formal economy, it's time to starting figuring out how to collect it.