Why Friday's jobs numbers are the best we've seen in a long while.
Jobs reports often seem a lot like Rorschach tests; they contain just enough information for an analyst to paint whatever picture of the economy he wishes.
But on the eve of America’s July 4th holiday, the Labor Department released its June Employment Situation Report, offering the strongest indication we’ve had in months that the economic recovery is accelerating and that recent news that the U.S. economy contracted in the first quarter was an aberration rather than a portent of further economic malaise.
The U.S. economy added 282,000 jobs in June and the unemployment rate fell two-tenths of a percentage point to 6.1, one of the strongest monthly readings we’ve had since the end of the recession. But dig deeper into the report and you’ll just keep finding more good news. Here are four reasons to celebrate the American job market this July 4th:
1. The long-term unemployment crisis is getting better: Perhaps the most pernicious effect of the financial crisis has been the explosion of long-term unemployment.
The number of long-term unemployed has been falling quickly in recent months. Sure, some of this has to do with people giving up looking for work altogether after Congress pulled the plug on unemployment benefits. But other data, like the fact that the number of discouraged workers—individuals who want to work but who aren’t currently looking for a job because they believe there are no jobs available—has fallen by 34% to 676,000 over the past year, says that some of these workers are finding employment again.
The improving situation for these workers, who are what economists call “marginally attached” to the workforce, can be also be seen in the rapid decline in the U-6 unemployment rate, which has fallen from 13.1% to 12.1% during 2014.
Some of these formerly discouraged workers may have turned to part-time work, as the number of people working part-time who wish to be working full-time increased by 275,000. But, of course, it’s better to have a part-time job than no job at all.
2. Employment gains were seen across every industry: From healthcare to retail to manufacturing, we’re seeing job growth in every sector of the economy. The biggest gains in June were in business and professional services, which saw an increase of 67,000 new jobs. These are high-paying positions, with an average hourly wage of $29.21, compared to $24.45 for jobs overall.
3. Pay is continuing to increase: While the economy has added jobs, they’ve tended to be lower-paying ones, which explains the fact that real average hourly earnings are lower today than at the end of the recession. But wages have begun to rise faster than inflation, and Thursday’s report confirmed that the trend is continuing, with average hourly earnings up 2% in the past 12 months.
4. The Employment Population Ratio held its gains: With America’s workforce getting older on average, we’d expect the ratio of workers to the overall population to decline slightly, but this figure plummeted during the recession, reflecting general economic weakness rather than just demographics.
But the ratio has turned around this year, giving credence to the idea that the economy is improving enough to bring workers back into the labor force.