Middling Jobs Numbers Signal a Long Path to Healthy Payrolls

Hiring in the United States is inching up  but not quickly enough to put much of a dent in the backlog of nearly 12 million unemployed workers left stranded by the recession and its aftermath.

American employers added 175,000 jobs in May, almost exactly the average monthly job growth over the last year, the Labor Department reported Friday, and wages remained basically flat. Economists were relieved that the numbers were not worse, given a string of other disappointing data in recent weeks, but noted that current job trends still left the economy far short of what it is capable of if Americans were more fully employed.

At the current pace of job and labor force growth, it would take nearly five years to get the economy back to the low unemployment rate it had when the recession officially began in December 2007.

gI feel hopeless, and that just makes it hard,h said Sherry Lockhart, 53, of Enumclaw, Wash., who was laid off by the statefs liquor control board a year ago, when voters privatized liquor sales. Now, her jobless benefits are about to be slashed as a result of federal spending cuts. gI just feel Ifve done my best over the years, and I feel like I havenft failed the system. The system has failed me, and millions more.h

By contrast, Wall Street was pleased with the latest report because the steady but modest gains suggest that the Federal Reserve will not feel comfortable tightening monetary policy anytime soon, as some had feared would be the case if the job market suddenly started showing major improvement. The Dow Jones industrial average and the broader Standard & Poorfs 500-stock index each closed up for the day by more than 1 percent.

gItfs a decent report, but itfs not by any means robust,h said Conrad DeQuadros, senior economist at RDQ Economics, a research firm. gItfs certainly not strong enough to get the Fed to make any significant changes at its meeting in June.h

The unemployment rate rose to 7.6 percent from 7.5 percent in April. The cause behind the uptick in the unemployment rate, at least, was also mildly encouraging: more people joined the labor force, perhaps indicating that Americans who have been sitting on the sidelines believe that they finally have a chance to find a job. This labor force participation rate is still low by historical standards, however.

Consumers have also been relatively upbeat recently. A New York Times/CBS News poll conducted May 31 to June 4 found that 39 percent of respondents believe the condition of the economy is very or fairly good, the highest share saying this both since President Obama took office and since the recession began in December 2007.

Despite signs of optimism from consumers and investors, other indicators of the health of the economy and the job market have been mixed. Average weekly hours and average hourly earnings, for example, have shown little improvement in recent months, according to the Labor Department. Wages are up just 2 percent from a year earlier, which leaves most Americans treading water, barely outpacing the rate of inflation.

gThe wage gains are very disconcerting, and particularly strange when you see these surveys of employers who say they have positions they canft fill,h said Ian Shepherdson, chief economist at Pantheon Macroeconomics. gThat means they should be bidding up wages.h

Wage growth may be held back by the composition of jobs being created, he said, as there are many jobs being added in low-paying sectors like retail. Restaurants and bars, for example, have added 337,000 jobs over the last year; that category now makes up about 7.6 percent of all payroll jobs, its largest share on record.

The other big industry to add jobs in May was professional and business services, particularly temporary help services. Temp services employment has been growing for six consecutive months, and as of May, about 2 percent of all American jobs were in the sector.

The federal government, on the other hand, lost 14,000 jobs in May, partly because of the across-the-board spending cuts, known as the sequestration, enacted by Congress in March.

gWith the recovery gaining traction, now is not the time for Washington to impose self-inflicted wounds on the economy,h Alan B. Krueger, President Obamafs chief economic adviser, said in a statement. gThe administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing.h

Over the last three months, the federal government has lost 45,000 jobs, not including the furloughs that many federal employees are being placed on. The Pentagon, for example, has said that it plans to furlough 680,000 civilian workers starting in early July, with most workers losing about one paid day a week.

Though difficult to measure, the sequestration has probably been dragging on the private sector as well, both because government contractors are laying off workers and because laid off or furloughed public workers have had less money to spend at their local businesses.

gTherefs surely some sequester effects in there, but thatfs something that will be disentangled in years to come,h Mr. Shepherdson said.

The recession in Europe and slowdown in Asia are also creating headwinds for American manufacturers, which have lost jobs for the last three months. The length of the average workweek for manufacturing workers rose slightly, to 40.8 hours in May from 40.7 hours in April.

gIf youfre a manufacturer and youfre uncertain about demand for your products because things in Europe arenft getting better, you might be more inclined to try to make more with what you have than to add permanent workers,h Mr. DeQuadros said.

In addition to causing layoffs, the sequestration could also be affecting those who already have lost their jobs through cuts to social safety net services like Meals on Wheels, housing subsidies and job training programs.

As of May, there were 11.8 million people unemployed, 4.4 million of whom had been out of work for at least six months.

Almost every state has cut its unemployment insurance benefits as a result of the sequestration, according to the National Employment Law Project, a labor-oriented research and advocacy organization. Some states, like Florida and Maine, are cutting the number of weeks for which jobless workers will continue receiving benefits, and others, like Illinois, are reducing the size of the weekly benefit checks. Some states, like Washington and Idaho, are also laying off employees who work in the labor agencies that help workers apply for benefits and find jobs.

North Carolina is ending its federally funded extended unemployment benefits on July 1 because reductions in its state benefits left it ineligible for the federal money.

gIfm having a hard time finding somebody who will give a 50-year-old with a few health problems a chance,h said Dwayne Fields of Goldsboro, N.C.

He was let go from his warehouse manager job of 12 years last October for gpoor job performanceh after he told his boss about some health problems, including a diagnosis of cardiomyopathy, hypertension and sleep apnea. He said he had since received treatment that has put him back into good working shape, but no one responds to his job applications. His $212 weekly jobless benefit checks are about to end.

gIfm probably too old to flip burgers and deliver pizzas,h he said. gBut if worse comes to worst, Ifll do it. Ifve got an old lady and an 11-year-old kid to support.h