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The latest government labor report indicates that job growth has slowed once again. It is now at a three-year low, with only an estimated 74,000 new jobs added this past month. To be sure, the nominal unemployment rate dropped to 6.7 percent, but as experts on both the left and the right have noted, the only reason for this improvement is the decline of labor force participation, which is at the lowest level since 1978, with little prospect of any short-term improvement.
Labor markets are no different from other markets. They work because they create win/win relationships. In contrast, the governments regulatory efforts to create win/lose relations will not work. What those efforts will get are the lose/lose scenarios that have been the bitter fruit of recent labor market regulations
The correct policy choice is strong deregulation of labor markets, which will spur higher labor market participation, albeit at somewhat lower wages. But once people get into the labor force, they can hone their skills in ways that will allow them to command higher wages
Nonfarm payrolls increased 217,000 last month, the Labor Department said on Friday, in line with market expectations. Data for March and April was revised to show 6,000 fewer jobs created than previously reported. "That suggests the first quarter was an anomaly in terms of what the economy was and we are back to a decent pace of job creation. Overall it's a pretty solid report," said John Canally, an economist at LPL Financial in Boston. May marked a fourth straight month of job gains above 200,000 even though there were fewer gains than the 282,000 seen in April when hiring was still bouncing back from a winter lull.
The nation finally recouped the 8.7 million jobs lost during the recession, with 8.8 million more people in work now than at the trough in February 2010. The working age population has risen 10.6 million since then though and 12.8 million people have left the labor force. "The trajectory of this recovery is still slower than all other ones," said Sam Bullard, senior economist at Wells Fargo Securities in Charlotte, North Carolina. "That's not going to change and it's not fast enough to bring back a lot of the workers who stopped looking anytime soon." U.S. stock prices opened up modestly, while yields on U.S. Treasury debt were little changed. U.S. dollar was also steady against the yen and euro.
ECONOMY GAINING STRENGTH
The pace of hiring adds to data ranging from automobile sales to services and factory sector activity that have suggested economic growth this quarter will top a 3.0 percent annual pace. The economy contracted at a 1.0 percent rate in the first quarter, dragged down by unusually harsh winter weather and a slow pace of inventory building by businesses. The unemployment rate held steady at a 5-1/2 year low of 6.3 percent in May even as some Americans who had given up the search for work resumed the hunt. A measure of underemployment that includes people who want a job but who have given up searching and those working part-time because they cannot find full-time jobs fell to 12.2 percent, the lowest since October 2008.
Economists expect more previously discouraged workers to re-enter the labor force over the course of the year. While that would be a sign of confidence in the labor market, it could slow the decline in the jobless rate. The report also showed the number of long-term unemployed fell. The average jobless American had been looking for work for 14.6 weeks in May, the shortest stretch in five years and a sharp drop from the prior month. The return of discouraged job seekers and drop in long-term unemployment will be welcomed by the Federal Reserve, which has cited low labor force participation as one of the reasons for maintaining an extraordinarily easy monetary policy.
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In December, April, and now May, the labor force participation rate has been 62.8 percent. That means that 37.2 percent were not participating in the labor force during those months. Before December, the last time the labor force participation rate sunk as low as 62.8 percent was February 1978, when it was also 62.8 percent. At that time, Jimmy Carter was president. In April, the number of those not in the labor force hit a record high of 92,018,000. In May, that number declined by 9,000 to 92,009,000. Yet, the participation rate remained the same from April to May at 62.8 percent.
The labor force, according to BLS, is that part of the civilian noninstitutional population that either has a job or has actively sought one in the last four weeks. The civilian noninstitutional population consists of people 16 or older, who are not on active duty in the military or in an institution such as a prison, nursing home, or mental hospital. In May, according to BLS, the nation’s civilian noninstitutional population, consisting of all people 16 or older who were not in the military or an institution, hit 247,622,000. Of those, 155,613,000 participated in the labor force by either holding a job or actively seeking one.
The 155,613,000 who participated in the labor force equaled only 62.8 percent of the 247,622,000 civilian noninstitutional population, matching (along with the 62.8 percent rate in May) the lowest labor force participation rate in 36 years. At no time during the presidencies of Ronald Reagan, George H.W. Bush, Bill Clinton or George W. Bush, did such a small percentage of the civilian non-institutional population either hold a job or at least actively seek one.
When President Barack Obama took office in January 2009, the labor force participation rate was 65.7 percent. By the beginning of 2013, the start of Obama’s second term, it had dropped to 63.6 percent. Since January 2014, when the participation rate was 63.0,it has continued to decline, hitting a 36-year low of 62.8 percent in May. People in the civilian noninstitutional population who did not have a job and did not actively seek one in the last four weeks are considered “not in the labor force.” The number of Americans not in the labor force has climbed by 11,480,000 since Obama took office, rising from 80,529,000 in January 2009 to 92,009,000 in May 2014.
37.2%: Percentage Not in Labor Force Remains at 36-Year High | CNS News
In May, there were 4,519,000 unemployed women, 60,000 more than the 4,459,000 American women who were unemployed in April, according to BLS. At the same time, the unemployment rate for women rose to 6.2 percent in May from 6.1 percent in April.
To be counted as unemployed, a person must have actively sought a job in the last four weeks and be part of what BLS calls the civilian non-institutional population (meaning a person is 16 or older and not on active duty in the military or in an institution such as a prison, mental hospital or nursing home).
The number of American women who had jobs increased 128,000 from April to May, increasing from 68,376,000 to 68,504,000. From April to May, the number of women in the civilian non-institutional population increased by 89,000, climbing from 127,951,000 to 128,040,000.
Of those 128,040,000 women in the civilian non-institutional population, 73,023,000 participated in the civilian labor force, meaning they either had a job or actively sought one in the past four weeks. That put the labor force participation rate for women at 57.0 percent in May—up from the 56.9 percent it was in April. There were also 55,017,000 women who did not participate in the civilian labor force in May, meaning they neither held a job nor actively sought one.
http://www.cnsnews.com/news/article/ali-meyer/unemployed-women-increased-60000-may
This is one of the funniest things I've ever read:
The correct policy choice is strong deregulation of labor markets, which will spur higher labor market participation, albeit at somewhat lower wages. But once people get into the labor force, they can hone their skills in ways that will allow them to command higher wages
That is one of the most hollow pieces of think tank thinking I've ever come across. It's obvious the great "thinkers" over at Hoover have no clue what goes on at Walmart and with unskilled workers everywhere. They aren't paid a living wage and therefore rely on Government assistance.
We the tax payers are indirectly subsidizing Walmart and the like-minded employers who refuse to pay a living wage as our taxes go to social programs that support their paid workers.
Technology and Automation will continue to gut the manufacturing sector. What a horror show we'll see when mid-level workers start getting replaced by AI machines. Who needs Human Resources or Accounting staff anymore when computers can do their jobs more efficiently and cheaper.
Oh what a rude awaking the industrialized world is in for as machines take over more jobs.
The notion that Walmart or any fortune 500 company can not pay their unskilled workers a higher wage and provide health insurance while still making massive profits is total bullshit. The entitlement mentality of the upper management keeps the profit tricking upwards. That disease is only surpassed by the insane greed of the Walton kids and others who think they are deserving of the billions reaped by cutting the labor costs.
Show me one valid economic formula that justifies the salary and bonus compensation of a CEO -- show a direct correlation between the day to day labor of the CEO and the company's profit.
I can show you how the hourly salary of a retail clerk is arrived at -- a fair percentage of the profit generated during the shift.
