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U.S. labor participation drops sharply as unemployment rate falls to 7.4 percent


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The U.S. economy added 162,000 jobs in July, driving the unemployment rate down to 7.4 percent, according to the U.S. Bureau of Labor Statistics, which released its monthly report this morning.

The largest job gains came from the retail sector, which added 47,000 jobs. Employment at bars and restaurants was up 38,000 jobs in July, and the financial sector added some 15,000 jobs.

In its own monthly report earlier this week, Automatic Data Processing reported a gain of 200,000 jobs last month.

Although the numbers are moving in a positive direction, Joseph Seneca, a professor at Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, said the gains are far from exciting.

“This is a plain vanilla report. It’s a letdown from the strong report we had last month,” Seneca said. “It just indicates more of the same old, same old — tepid, but steady, employment gains.”

One area of particular concern is the number of people who dropped out of the labor market and are no longer searching for work, which shot up from 136,000 people in June to just shy of 1 million in July.

In addition, the average workweek saw a drop in July, down to 34.4 hours a week. And average hourly earnings, which had risen by 10 cents in June, decreased by 2 cents in July, to $23.98.

“It’s OK, but it’s not the sort of growth in both output and employment that have historically been characterized by this stage in a recovery,” Seneca said. “It indicates the severity of the recession, particularly in the labor markets.”

Reporter Mary Johnson is @mjohns422 on Twitter.

Mary Johnson

Mary Johnson

Mary Johnson is a staff reporter covering midsized and growth companies, as well as women in business. Mary lived in Fla., Texas, Conn. and N.Y. before moving to N.J. with her husband and infant son. Email her at She is @mjohns422 on Twitter. Read her blog, Breaking Glass.


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