The government’s Bureau of Labor Statistics reported Friday that the economy generated 223,000 seasonally adjusted new jobs in May. The headline unemployment rate fell to 3.8 percent—as low as it’s been in nearly two decades. Another broader measure—of unemployment and underemployment—fell from 7.8 percent to 7.6 percent.
The report marked the 92nd consecutive month of overall job growth.
Following its standard procedure, the bureau revised its calculations for the two previous months after factoring in data that was unavailable when reports for those months were originally released. March’s gains were revised from 135,000 to 155,000; April’s from 164,000 to 159,000.
The New York Times on Friday headlined this news as a “bustling economy.” But while job growth continues to show significant strength, wages are just barely keeping up with inflation.
Nine years ago this month, the Great Recession ended. That is, economic expansion began again then. However, the National Bureau of Economic Research, which operates as the accepted arbiter of when recessions begin and end, didn’t make this announcement in June 2009. That took until September 2010 when it was completely clear that the gradual improvement wasn’t just a blip. Here’s how the NBER describes its methodology in making such determinations.
The official end of the recession, however, didn’t mean most Americans had recovered from the acute impacts of that steep downturn. Unemployment remained high for several years, so much so that large numbers of people despaired and left the workforce altogether. As the recession took its toll, vast numbers emptied their savings, lost their homes, delayed college, and saw their families come apart at the seams. Today, many Americans still feel the recession’s negative effects even though the job market is obviously far better than in those days when hundreds of thousands were being laid off month after month.
And though the acute impacts of the Great Recession are mostly memories now, the chronic effects—such as wage stagnation—that long predated the near-collapse of the economy remain with us. Moreover, while jobs are considerably more plentiful, a lot of people who found work as the recovery grew took positions in which they did similar or the exact same tasks they had done before they were laid off—but they had to do it for less money and lower benefits.
Friday’s BLS statistics showed that weak wage growth is very much still with us, with the average hourly pay for all workers in the non-farm economy rising in May just 8 cents an hour to $26.92. Since last May, average hourly wages have risen 71 cents. That’s 2.7 percent over the 12-month period. During that same period, inflation has risen 2.5 percent. In other words, the average worker is just treading water economically.
Despite what many companies are calling a tight labor market that isn’t providing them workers with the needed skills, one remedy for that problem—offering higher wages—just isn’t happening, at least not broadly. One can speculate that part of the reason for this is that despite an improved economy, many workers are fearful of asking, individually or collectively, for a raise because of what happened to them economically during the Great Recession. They feel lucky to be employed at all. There’s a sense of precariousness about the current improved situation. There are a few exceptions, as we have seen with strike by teachers.
In a piece written a day before Friday’s BLS report was released, Elise Gould at the Economic Policy Institute had more to say on the subject of wage growth. An excerpt:
The unemployment rate of 3.9 percent seems to be overstating the strength of the labor market given how many sidelined workers appear to want jobs. Furthermore, upwards of 70 percent of the newly employed are coming from out of the labor force as opposed to those “actively” looking for work, that is, among those officially counted in the U3 unemployment rate. We only need to look as far as nominal wage growth to know that we are not yet unambiguously at full employment. Employers and workers alike seem to recognize the slack out there and workers still do not have sufficient leverage to bid up their wages. Year-over-year nominal wage growth has averaged 2.6 percent over the last couple of years, consistently below target levels.
Here are some details from the May report:
Unemployment rates differ by race and sex. [Percentages in brackets are for April]. Adult men: 3.5 percent [3.7]; Adult women: 3.5 percent [3.5]; Whites: 3.5 percent [3.6] ; Blacks: 5.9 percent [6.6]; Asians: 2.1 percent [2.8]; Hispanics: 4.9 percent [4.8]; American Indians: (not counted monthly).
Each month’s jobs gains or losses are calculated by analyzing the Current Employment Survey of 147,000 business establishments. The unemployment rate is calculated from the Current Population Survey of 60,000 households.
U3 is the BLS label for its headline rate of unemployment. In addition, the bureau calculates a rate it labels U6. This scrutinizes “labor underutilitization” and covers both unemployment and underemployment. In May, as noted above, U6 fell to 7.6 percent. Its low shortly before the Great Recession began was 8 percent in March 2007. However, in mid-2001, it reached 6.9 percent. The U6 count covers a number of categories, one of those being part-time workers who want full-time positions but cannot get them.
The civilian workforce rose by 12,000 in May after falling 236,000 in April and 168,000 in March. The labor force participation fell to 62.7 percent in May, and the employment-population ratio rose slightly to 60.4 percent.
Additional details from the May report:
• Average hourly earnings of private-sector production and nonsupervisory employees rose cents an hour to $26.92.
• Average work week for all employees on non-farm payroll remained unchanged at 34.5 hours in May.
• Average hourly earnings for all employees on private non-farm payrolls rose 7 cents an hour to $22.59.
• The manufacturing work week in May fell 0.2 hours to 40.8 hours.
May Job Gains and Losses for selected categories:
- Professional services: 31,000
- Temporary help services: -7,800
- Transportation & warehousing: 18,700
- Financial activities: 8,000
- Leisure & hospitality: 21,000
- Information: 6,000
- Education and health services: 39,000
- Health care & social assistance: 31,700
- Retail trade: 31,100
- Construction: 25,000
- Manufacturing: 18,000
- Mining and Logging: 4,000
Here's what the seasonally adjusted job growth numbers have looked like in the previous decade compared with this May’s gain of 223,000 jobs.
May 2008: -184,000
May 2009: -354,000
May 2010: 522,000
May 2011: 81,000
May 2012: 117,000
May 2013: 240,000
May 2014: 252,000
May 2015: 326,000
May 2016: 34,000
May 2017: 155,000