CBPP Statement: June 6, 2014
For Immediate Release
Statement by Chad Stone, Chief Economist, on the May Employment Report
More than six years after the Great Recession and the worst jobs slump since
the 1930s began, todayfs jobs report shows that payroll employment has finally
topped its level at the start of the recession (see chart). Still, with
essentially no net job growth since December 2007 but a growing working-age
population, many more people today want to work but donft have a job.
Not all of these people show up in the official unemployment rate. Thatfs
because some of them who want a job arenft actively looking for one, for any
one of several reasons. Some are discouraged by their prospects of
finding a job. Others have decided that, until job prospects improve,
they could better spend their time staying home to care for young children
rather than pay for child care, doing home repairs rather than pay someone to
do them, or taking courses at the local community college to improve their
future earnings prospects. These people are not classified as unemployed
because they are not actively looking for work and therefore not in the labor
force.
Stronger demand for goods and services and the faster job creation that will
result from it is the key to lowering unemployment and enticing people back
into the labor force. Hopeful signs suggest that the slide in labor
force participation that has characterized this weak recovery may be ending,
but we still have a long way to go before we return to full employment with
normal labor force participation.
Stronger demand growth and faster job creation also may be the last best
hope for the long-term unemployed (those looking for work for six months or
longer), who research suggests donft look much different from other unemployed
workers — except that they lost their job at a particularly bad time for
finding a new one and then faced discrimination by prospective employers for
having been unemployed so long. Policymakers abandoned the long-term
unemployed, first when they let emergency federal unemployment insurance (UI)
expire at the end of last year and then when the House refused to even consider
the bipartisan Senate compromise that would have extended those benefits
through the end of last month.
Emergency UI not only provides needed financial support to jobless workers
and their families, but also keeps long-term unemployed workers in the labor
force looking for work rather than dropping out. On a bang-for-the-buck
basis, itfs also one of the best ways to stimulate demand and strengthen the
job market. That policymakers let it lapse was a tragedy.
About the May Jobs Report
Employers reported solid payroll growth in May. In the separate
household survey, the labor force grew moderately and the unemployment rate,
labor force participation rate, and percentage of the population with a job
were essentially unchanged.
- Private and government payrolls combined rose by 217,000 jobs in May but
the Bureau of Labor Statistics revised job growth in the previous two months
downward by a total of 6,000 jobs. Private employers added 216,000 jobs
in May, while overall government employment rose by 1,000. Federal
government employment fell by 5,000, state government fell by 5,000, and
local government rose by 11,000.
- This is the 51st straight month of private-sector job creation, with
payrolls growing by 9.4 million jobs (a pace of 184,000 jobs a month) since
February 2010; total nonfarm employment (private plus government jobs) has
grown by 8.8 million jobs over the same period, or 173,000 a month.
Total government jobs fell by 599,000 over this period, dominated by a
loss of 348,000 local government jobs.
- The job losses incurred in the Great Recession have been erased.
There are now 620,000 more jobs on private payrolls and 113,000 more jobs on
total payrolls than there were at the start of the recession in December
2007. Because the working-age population has grown over the past six
and a half years, however, the number of jobs remains far short of the number
of jobs needed to restore full employment. The pace of job creation so
far this year (214,000 jobs a month) is the highest five-month average in
over a year, and, if maintained, would gradually restore normal labor market
conditions. Faster job growth would clearly be better, though.
- The unemployment rate held steady at 6.3 percent in May, and 9.8 million
people were unemployed. The unemployment rate was 5.4 percent for
whites (1.0 percentage points higher than at the start of the recession),
11.5 percent for African Americans (2.5 percentage points higher than at the
start of the recession), and 7.7 percent for Hispanics or Latinos (1.4
percentage points higher than at the start of the recession).
- The recession drove many people out of the labor force, and lack of job
opportunities in the ongoing jobs slump kept many potential jobseekers on the
sidelines and not counted in the official unemployment rate. Although
the decline in labor force participation appears to have bottomed out, the
labor force participation rate (the share of the population aged 16 and over
either working or actively looking for work) remained at 62.8 percent in
May. It hasnft been lower since 1978. The labor force grew by
192,000 in May, the number of employed by 145,000, and the number of
unemployed by 46,000.
- The share of the population with a job, which plummeted in the recession
from 62.7 percent in December 2007 to levels last seen in the mid-1980s and
has remained below 60 percent since early 2009, was 58.9 percent in May,
slightly above its 2013 average of 58.6 percent.
- The Labor Departmentfs most comprehensive alternative unemployment rate
measure — which includes people who want to work but are discouraged from
looking (those marginally attached to the labor force) and people working
part time because they canft find full-time jobs — edged down to 12.2 percent
in May. Thatfs down from its all-time high of 17.2 percent in April
2010 (in data that go back to 1994) but still 3.4 percentage points higher
than at the start of the recession. By that measure, about 19 million
people are unemployed or underemployed.
- Long-term unemployment remains a significant concern. Roughly a
third (34.6 percent) of the 9.8 million people who are unemployed — 3.4
million people — have been looking for work for 27 weeks or longer.
These long-term unemployed represent 2.2 percent of the labor force.
Before this recession, the previous highs for these statistics over the
past six decades were 26.0 percent and 2.6 percent, respectively, in June
1983, early in the recovery from the 1981-82 recession. By the end of
the first year of the recovery from that recession, however, the long-term
unemployment rate had dropped below 2 percent.
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