Despite the contraction in the first quarter GDP of a full percentage point, hiring stayed steady in May, according to the new BLS jobs report. The US economy added 217,000 new jobs, above the level needed for population growth but not much help for putting a dent into the numbers of the chronically unemployed:
Total nonfarm payroll employment rose by 217,000 in May, and the unemployment rate was unchanged at 6.3 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in professional and business services, health care and social assistance, food services and drinking places, and transportation and warehousing.
The unemployment rate held at 6.3 percent in May, following a decline of 0.4 percentage point in April. The number of unemployed persons was unchanged in May at 9.8 million. Over the year, the unemployment rate and the number of unemployed persons declined by 1.2 percentage points and 1.9 million, respectively. (See table A-1.) …
Among the unemployed, the number of job losers and persons who completed temporary jobs declined by 218,000 in May. The number of unemployed reentrants increased by 237,000 over the month, partially offsetting a large decrease in April. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their current job search.) (See table A-11.)
The topline number came in right around the expectations of analysts prior to the ADP report on Wednesday, which actually undershot the official number by almost 40K. Expect media analysis to focus on expectations rather than the barely-above-stagnation level of job creation.
The uptick included a slight return to the labor force, but not enough to budge the civilian workforce participation rate from its generational lows of 62.8%. BLS notes in the report that this has dropped 0.6 points over the past year, but that’s actually understating the problem. Five years ago, when the so-called recovery started, that ration was 64.7%, which was itself in decline from the peak Bush-era number of 66.4% in 2006. We’ve had a sharp and so far unrecovered change that has millions sidelined, which is why a growth number of 217,000 isn’t much more than a maintenance result.
CNN’s Annalyn Kurtz notes that we have returned to the peak level of jobs in America, but puts that figure in the correct perspective of population growth:
The last time we were near this point was January 2008, just before massive layoffs swept throughout the country, leading the unemployment rate to spike to 10%. The unemployment rate is unchanged at 6.3%, and much has improved since the worst of the crisis.
Yet, this isn’t the moment to break out the champagne. Given population growth over the last four years, the economy still needs more jobs to truly return to a healthy place. How many more? A whopping 7 million, calculates Heidi Shierholz, an economist with the Economic Policy Institute.
At a rate of 217K per month with 150K needed to keep pace with population growth, how long will it take us to catch up to that 7 million? Oh …. eight years and nine months.
In this case, it’s better to track U-6 rather than U-3, which takes into account more of the chronically unemployed. That dropped to 12.2%, which is the lowest it has been since October 2008. However, it was 8.0% in March 2007, and it looks like it’ll take most of those eight years to get back to that level at the pace we are on.
Update: Older readers will remember that the Bush economy got criticized (unfairly) for only creating low-wage “McJobs” while adding between 300-400K jobs a month. CNBC’s Jeff Cox notes that the “McJob” criticism is more applicable now:
Nonfarm payrolls continued to grow about in line with recent trends, rising 217,000 in May as the unemployment rate held steady at 6.3 percent, according to numbers released Friday by the Bureau of Labor Statistics.
Most of the job gains came on lower-paying industries as wages rose modestly, increasing 5 cents an hour to maintain the modest 2.1 percent growth over the past 12 months. Average hours worked came in flat at 34.5. …
Professional and business services along with health led the way in May, with both sectors creating 55,000 new jobs. Hospitality—primarily bars and restaurants—grew by 32,000.
Manufacturing and construction, by contrast, were about flat. Labor force participation, a key metric that whose sharp decline has played a major role in the falling unemployment rate, remained flat at 62.8 percent, matching the worst level since March 1978.