Employment growth continued on its too-slow-but-steady trend in May, when U.S. employers added 217,000 jobs, according to new data released today from the Bureau of Labor Statistics, or BLS. The headline unemployment rate remained unchanged at 6.3 percent. The labor participation rate also remained unchanged at 62.8%
May marks the first time that the U.S. labor market surpassed its pre-recession level of employment—last seen in December 2007—making this the longest march to employment recovery in the postwar era. Over the past year, job growth averaged 198,000 new jobs per month, according to BLS data. While the economy continues adding jobs, these new jobs are too few to deal with the deep problem of unemployment and too often fail to deliver middle-class wages.
But simply recovering to the earlier employment peak says little about the health of the U.S. labor market, given population and potential labor-force growth in the more than six intervening years. In this time, the U.S. civilian population increased by nearly 14.5 million people, although the labor force grew by just 1.7 million new jobs, according to BLS data. This gap in labor-force participation goes beyond the 9.8 million people counted as unemployed in May, reflecting a sizable pool of millions more workers, an estimated 7.3 million people, who remain in disguised unemployment or underemployment—that is to say, working in jobs that do not fully utilize their skills or force involuntary part-time employment
One reason for workers’ discouraged outlooks may be the quality of jobs on offer in the labor market. Across the economy, low-wage industries have been leading job growth in the recovery from the Great Recession. Although employers added jobs in a broad range of industries, the bulk of new jobs added are found in a handful of industries known for low wages—accommodation and food services, temporary help services, retail trade, and long-term health care. These low-wage jobs together accounts for two-fifths of all new jobs added. Looking at where new jobs are being created is useful to see how the structure of the U.S. economy is changing overall as it expands. Significantly, employment in temporary help jobs has grown by 45 percent in the recovery and accounted for 10 percent of overall employment gains, as employers have waded tepidly back into hiring decisions. Employment in accommodation and food services—where many of our economy’s minimum-wage jobs exist—grew 13 percent and accounted for 17 percent of total new employment.
For the economy overall, average hourly wages increased five cents to $24.38 in today’s BLS report. Over the past year, wages have grown 2.1 percent before inflation, while inflation has increased by 2 percent, thus real wages are essentially holding steady.
The foremost obstacle to accelerating job creation remains the lack of demand in the economy—where consumers aren’t consuming enough, businesses aren’t investing enough, foreign trade is lopsided, the public sector is retrenching and businesses continue to face uncertainty in matters like regulation, health care and the environment, reasonable people have to wonder what it is going to take to create an economy where new jobs deliver middle-class opportunities to workers in the United States.