June Jobs: Another Lousy Report
The June jobs report is out and it was another lousy report. The Labor Department said the US economy added only 18,000 jobs last month and the unemployment rate ticked up to 9.2 percent.
The jobs market along with the other problem child of the economy, housing, is just not making fast enough progress to move the needle for millions of Americans. But it's not just jobs created--Americans are not seeing wage increases that normally accompany recoveries.
According to the Wall Street Journal: "year-on-year earnings growth peaked at 4.3% in December 2006 and hit a low of 2% last December. It has failed to show much of a pickup since, staying at 2.1% through May. Just twice during the postwar period, in the mid-'80s and mid-'00s, has average hourly earnings growth dropped below 2%."
A recent study ("The 'Jobless and Wageless Recovery' From the Great Recession of 2007-2009") conducted by economists at Northeastern University lays out a potential reason that wages are stagnating: the money that companies have earned during the recovery has mostly stayed within corporate America and has not trickled down into higher wages. From the second quarter of 2009, when the recovery began to the fourth quarter of 2010, "corporate profits captured 88 percent of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1 percent".
As a means of comparison, in the 18 months after the 2000-2001 recession, 53% went to corporate profits and 15 percent went to aggregate wages and salaries. In the 18 months after the 1990 recession, corporate profits actually fell by 1 percent and 50 percent of the growth in national income went to wages and salaries.
Companies have every right to earn money and even keep it, but if you want to better understand why so many Americans feel lousy, the jobless and wageless recovery is a good place to start. While the difference between corporate profits and wages during the recovery is "unprecedented," there is data to confirm that over the past decade, a slew of Americans just stood still.
According to Calculated Risk, the US has gone "over eleven years with no increase in total payroll jobs. And the median household income in constant dollars was $49,777 in 2009. That is barely above the $49,309 in 1997, and below the $51,100 in 1998. (Census data here in Excel)."
June Jobs Report
- June Jobs: +18,000
- June Private Sector Jobs: +57,000
- May Unemployment Rate: 9.2 percent, from 9.1 percent in May
- Under-Employment Rate (marginally-attached, part-time): 16.2 percent from 15.8 percent in May
- Labor Force Participation Rate (percentage of the working age population in the labor force) : 64.1 percent
- February, March and April average job creation: +215,000 per month; April and May revised down by 44,000)
- Total non-farm Jobs created in 2011: 757,000 (126,000 per month)
- Total Jobs created since May, 2010: 1.8 million
- Number of years to return to pre-recession employment (assuming current level of job creation): 4 (late 2014 or early 2015)
- Total Jobs Lost since beginning of recession in 2007: 6.98 million
- Unemployed persons: 14.1 million, from 13.9 million in May
- Long-term unemployed (jobless for 27 weeks and over): 6.3 million, from 6.2 million in May, which represents 44.4 percent of the total unemployed
- Part-timers (hours cut for economic reasons): 8.6 million
- Average Hourly Earnings: down $0.01 to $22.99 (Over the past 12 months, average hourly earnings have increased by 1.9 percent.
- Average Workweek: 34.3 hours
- Retail:+5,200
- Professional/Business Services: +24,000
- Leisure and Hospitality: +34,000
- Temporary Services:-12,000
- Health care: +14,000 (Over the prior 12 months, average of 24,000 jobs per month)
- Government: -39K (eighth consecutive month of job losses. Nearly 500,000 total government jobs lost since peak in September 2008)
- Manufacturing: +6,000 (+250,000 since December 2009)
