Job Growth Heats Up, but Full Employment Far Away
SOURCE: AP/M. Spencer Green
This column was originally posted on MarketWatch.
Today’s new data from the U.S. Bureau of Labor Statistics show a labor market continuing along a path to recovery. The BLS reports that the U.S. economy added 195,000 new jobs in June and the unemployment rate stayed at 7.6 percent.
What’s more, upward revisions to the prior two months’ data show that U.S. employment is 70,000 jobs higher than previously reported. The private sector has added an average of 206,000 jobs per month this year, while the federal government has shed an average of 7,600 jobs per month, dragging down employment.
Even as employers added jobs, however, the share of the U.S. population at work didn’t rise above 58.7 percent, continuing to stay within the same small band it’s been contained in since September 2009—between 58.2 percent and 58.7 percent. This is nowhere near the height in 2006 and 2007 of more than 63 percent of the population having a job, let alone the more than 64 percent employed in 2000.
And many of those who gained jobs took part-time jobs: The number of people employed part time for economic reasons, as opposed to voluntarily choosing to work part time for personal reasons, rose by 322,000 in June.
Moreover, June’s job gains didn’t even keep up with the growth in the number of people willing and able to work: The labor force grew by 177,000 people in June, while the number employed grew by 160,000. Given this, it’s hard to believe that our work pushing the economy toward full employment is anywhere close to done.
To spur the kind of job creation our nation needs, Congress needs to change course. While the Federal Reserve has taken important steps in support of economic recovery by continuing to keep interest rates low and continuing its $85 million-a-month bond-buying program, Congress has been working against them. The sequester—the across-the-board cuts of a total of more than $85 billion that began to be implemented in March of this year—continues to work its way through the economy, dragging us down day by day.
While the economy may be strong enough to withstand those kinds of cuts and not fall back into recession, this certainly is not the right path forward to improve our nation’s overall employment situation.
Looking deeper into the data, June’s job gains occurred across a wide variety of industries, including retail, health care, and financial activities. Temporary help services added 10,000 new jobs in June, about half as many as had been added in the prior three months. This could be a good sign if employers are adding permanent rather than temporary employees.
The employment data also show that more people are being hired in services that cater to people eating out or seeking fun times. The leisure and hospitality industry added 75,000 jobs in June, much higher than the average of 55,000 per month in 2013. Within this industry, food services and drinking places added 52,000 employees, about on par for 2013 but twice as many jobs per month as in 2012, while amusements, gambling, and recreation added 19,000 employees after adding 22,000 in May, a pace that is about four times the average in the preceding 12 months.
More people may feel like going out and having fun because the numbers of workers who are long-term unemployed continue to fall. Compared to a year ago, there are a million fewer long-term unemployed workers—that is, workers who have been out of work and searching for a new job for at least six months. In June the share of workers who were long-term unemployed fell to 36.7 percent, down from 37.3 percent in May and 41.7 percent a year ago. The typical worker took 16.3 weeks to find a job, down from 17.3 weeks in May and 19.4 weeks a year ago.
Average wages for all workers rose by an exceptionally high 10 cents, for a total of 26 cents in all of 2013. The average quarterly annualized rate of wage growth is 2.1 percent, only slightly below the rate of inflation over the past year, which was 2.2 percent as measured by the consumer price index for all urban consumers. This month’s higher-than-usual wage should be interpreted with caution, as we’ll find out next month if this is part of a trend or if it reverses a bit.
Today’s BLS report provides some welcome news that the labor market is indeed moving in the right direction. It also confirms the optimism picked up by the June index of consumer sentiment, which was at a near-six-year high. Even so, with nearly 12 million people still out of work, this is no time to sit on our hands and pretend that the job of pushing the economy back to full employment is not still an urgent and pressing issue.
Heather Boushey is Chief Economist at the Center for American Progress.
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