U.S. payrolls contracted by 4,000 in August—blindsiding economists who had been expecting growth of 115,000.

The "other" employment survey—of households rather than businesses—painted an even bleaker picture: a job loss of 316,000.

That's a scary data point, one that may force Ben Bernanke to cut the Federal Funds rate even before the next FOMC meeting.

But before pulling what may be an inflationary trigger, the Fed Chairman should ponder the explosive job gains registered by Hispanics.

Here are the August job numbers from the household survey:

• Total: -316,000  (-0.22 percent from July)

• Non-Hispanic: -584,000 (-0.46 percent)

• Hispanic: +268,000 (+1.32 percent)

More than a quarter of a million Hispanics found jobs in August, the largest monthly increase since March 2004, and the third highest since the start of the Bush Administration in 2001. Meanwhile, the nearly 600,000 reduction in non-Hispanic employment was the biggest hit this group took since April 2005.

Bottom line: Worker displacement catapulted to a record high in August.

The VDare.com Worker Displacement Index (VDAWDI) quantifies the displacement of non-Hispanic workers by Hispanics since the start of the Bush Administration. Calculated by dividing the index of Hispanic employment growth by the index of non-Hispanic growth (January 2001=100.0). Because so many Hispanics are recent immigrants, VDAWDI is a good measure of how immigrants have fared relative to native-born workers during that time.

The graph tells the story best:

 

The blue line reflects Hispanic employment growth; red is non-Hispanic job growth; and yellow is VDAWDI - the ratio of Hispanic to non-Hispanic job growth...

VDAWDI rose to a record 124.2 in August from 122.0 in July.  This marked the largest percentage gain in the worker displacement index since March 2004. There have been only three months since January 2001 in which displacement rose by a larger percent.

As the graph makes clear, August was merely an extreme case of the displacement that has gone on for years. Just look at the job growth figures for the period from January 2001 to August 2007:

• Total: +8.016 million (+ 5.82 percent from Jan. 2001)

• Non-Hispanic: +3.537 million (+2.91 percent)

• Hispanic: +4.481 million (+27.8 percent)

In other words: in August 2007, 16 percent of U.S. workers were Hispanic.

Yet more than half (56 percent) of the jobs created since January 2001 went to Hispanics.

To paraphrase Brecht, George Bush is dissolving the American workforce and electing a new one.

Edwin S. Rubenstein (email him) is President of ESR Research Economic Consultants in Indianapolis.