July 22, 2017

Middling Jobs Gain Signals a Long Path to Healthy Payrolls

Economists were relieved that the numbers weren’t worse, given a string of other disappointing data in recent weeks, but noted that recent job trends are nowhere close to bringing the country back to full employment. At the current pace of job and population growth, it would take nearly five years to get the economy back to the low unemployment rate it enjoyed when the recession officially began in December 2007.

“I feel hopeless, and that just makes it hard,” said Sherry Lockhart, 53, of Enumclaw, Wash. She was laid off by the state’s liquor control board a year ago, when voters privatized liquor sales, and her jobless benefits are about to be slashed as a result of federal spending cuts. “I just feel I’ve done my best over the years, and I feel like I haven’t failed the system. The system has failed me, and millions more.”

Still, the cause behind the uptick in the unemployment rate, at least, was mildly encouraging: more people joined the labor force, perhaps indicating that Americans who have been sitting on the sidelines feel that they finally have a chance at finding a job.

“It’s a decent report, but it’s not by any means robust,” said Conrad DeQuadros, senior economist at RDQ Economics, a research firm. “It’s certainly not strong enough to get the Fed to make any significant changes at its meeting in June,” he said, referring to speculation that the Federal Reserve might consider tapering its stimulus measures if the jobs numbers came in strong.

The major stock market indexes — the Dow Jones industrial average and the broader Standard Poor’s 500 — were up in midday trading by about 1 percent.

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 even since the recession began.

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 bodes poorly for consumer spending.

“The wage gains are very disconcerting, and particularly strange when you see these surveys of employers who say they have positions they can’t fill,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “That means they should be bidding up wages.”

Wage growth may be held back by the composition of new jobs being created, he said, as there are a lot of jobs being added in low-paying sectors like retail. Restaurants and bars, for example, have added 337,000 jobs over the last year, and 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 straight months now, 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, presumably a result of the across-the-board federal spending cuts, known as the sequester, implemented by Congress in March.

“With the recovery gaining traction, now is not the time for Washington to impose self-inflicted wounds on the economy,” said Alan B. Krueger, President Obama’s chairman of the Council of Economic Advisers, in a statement. “The 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.”

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

Though difficult to measure, the sequester has probably been dragging on the private sector, 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.

“There’s surely some sequester effects in there, but that’s something that will be disentangled in years to come,” said Mr. Shepherdson.

Article source: http://www.nytimes.com/2013/06/08/business/economy/us-added-175000-jobs-in-may-jobless-rate-rises-to-7-6.html?partner=rss&emc=rss

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