May Employment

Traditional employment measures improved in May according to the Bureau of Labor Statistics. Unemployment remained steady at 6.3 percent and 217,000 new jobs were added in the period.  Private payrolls created 216,000 of the new positions, suggesting firms are confident enough in the future to increase the most expensive portion of their operations.

The labor market hit a couple of milestones in May.  For the first time since 1999, the economy has been able to increase payrolls by over 200,000 for four consecutive months.  Next, May was the month in which the economy was finally able to make up for all of the jobs lost during the great recession.  In other words, it took five years to add back all of the jobs lost during the 18 month recession between January 2008 and June 2009.  So we are back. Right? Well…probably not; for one thing, the economy continued to shed jobs for another six months after the recession ended, adding another 1.257 million to the tally of jobs lost as a result of the recession.  Also, there continues to be questions around the quality of the jobs being added versus those that were lost.  Then there are many other labor market metrics that are not confirming the idea of a recovered jobs market.  For instance, wages have been relatively stagnant, hours worked have not budged much, and labor participation has collapsed (although demographics are likely to blame for some of this).

Healing but not healed continues to be an accurate description of the labor market. American employers have added numerous employees to their payroll, but there continues to be a large subset within the working age cohort which has not fully recovered from the great recession.  As the expansion moves forward, some will make the transition back into working status, but how many remains a mystery.  It will largely be dependent on how much longer this recovery continues.  As a footnote, this economic upswing is getting long in the tooth by historical standards.  (by C. Cox)