Commentary: Job Report Solid, But Remains Insufficient
Tuesday, June 11th, 2013
The Bureau of Labor Statistics released the U.S. jobs report for May and it was solid with jobs growing by 176,000 and the unemployment rate rising slightly from 7.5% to 7.6%. Since it met the expectations of most analysts, the markets responded positively with stocks edging up.
On the bright side, we are seeing a steady downward trend in the unemployment rate with it falling from more than a half a percent from last May (8.2% to 7.6%). The largest gain in jobs was in the business and professional services sector. Also, a broader measure of unemployment that measures individuals, who are underemployed, has fallen from 14.4% to 13.8%. That suggests that people are finding it easier to find full-time work. Lastly, there has been some modest progress for the long-term unemployed. The number of long-term unemployed has fallen from 42.4% to 37.3%/ However, this is still unacceptably high. During normal economic times, this rate was closer to 20%.
On the negative side, it appears that more people are dropping out of the labor force. Even though the number of discouraged workers declined over the last twelve months, that might be misleading. Another indicator that measures the number of people, who want a job, but are currently not in the labor force because they believe employment prospects are dim paint a different light. This shows that there are now 7,193 individuals, who are out of the labor force, but want to work. This number is up from 6,835 in May 2012. Lastly, the rate of job growth is insufficient to get us back to normal employment anytime soon.
Check out this quote from Heidi Shierholz from the Economic Policy Institute, who stated that:
“Given our deficit of 8.5 million jobs, we need more than 300,000 jobs per month to get to full employment by May 2016, three years from now and six months before the next presidential election. At the job growth rate of the last year, we will still have a deficit of 4.6 million jobs in May 2016.”
While we can be encouraged that the labor market is showing steady growth, more robust job creation is necessary for our economy to prosper.