It’s always nice to get good news, and the Labor Department telling us that the U.S. economy added 288,000 jobs in June was definitely good news.
Unfortunately, it wasn’t good enough. It would be great if most of those additional jobs were full-time jobs at good pay. They weren’t. Fully 275,000 new jobs in June were part-time.
Overall, we are still in VERY slow recovery mode in the US job market. In Dec. 2007, just before the recession began, 16.9% of the employed workers were working part-time jobs(defined as under 35 hours per week). In the pit of the recession in in February 2010, that rose to 20.1%, or almost one-fourth higher. Today, after four years of recovery, the fraction of employed workers working less than full-time is (ta dah!) 19.2 %.
So we have hardly at all recovered the balance of full-time vs. part-time work that prevailed before the recession.
The same is true with regard to work-force participation. The totals look pretty stuck: In December 2007, the percentage of working-age Americans in the labor force was 66%, which is pretty much what it had been for the preceding five years. Since then, labor-force participation has steadily fallen, without any sign of recovery — to 65% in 2010, 64% in 2012, and 63% in 2015. The latest figure: 62.8% in June 2014, matches the lowest level since 2004.
Hours worked and real median wages tell a similar story of stagnation — there just doesn’t seem to be much demand for labor that would drive wages higher.
So yes, businesses hired workers — but mainly lots of part-time workers, and bosses were not working existing workers harder or increasing their wages.
We thus have to wait and see: was this surge in hiring an effort by business and construction to make up for the production lost during the terrible, weather-dampened first quarter, when GDP fell by almost 3% at an annual rate? If so, then hiring part-timers to push up production for a few months in order to make up lost ground in the first quarter is just going to be temporary, and we will see new hiring decline back to lower levels later in the year. Or was this surge an indication of the much sought-for “take off velocity” in which the economy starts generating more jobs, which generates more demand, which generates more hiring, in a virtuous circle to kick up growth?
Given the lack of increase in hours and wages, and the ever lower level of labor force participation, it is hard to believe that the June surge alone is going to start that virtuous cycle of higher demand. It will take a few more months of strong jobs data before we can be confident we are getting there.
Meanwhile, we have to wait–but let’s give one-and-a-half cheers for a job number near 300,000 per month. If we see more like that in the months to come, I may start to abandon my pessimistic outlook and start to see true recovery.