June 6, 2014

May report shows a slow slog to more jobs, higher pay

The national jobs report continued the long, exceedingly slow trend of slight improvement since the 2008 economic collapse. Finally, private payroll workers are seeing modest pay increases — though it's not enough for most workers to notice. But public sector employment, comparatively well-paying, is not growing.

Sporting a net gain of 217,000 jobs and an unemployment rate holding steady at 6.3 percent, May’s national jobs report on Friday offered a picture of improving economic health.

Nearly five years after the Great Recession ended, the U.S. economy finally has created and surpassed the number of jobs lost in the downturn. The job gains have averaged 234,000 in the last three months, cementing belief in a strengthening resurgence.

But the 51st straight month of private-sector job growth hides a nagging bruise: Wages and labor force participation haven’t grown enough to push the recovery any faster.

The U.S. Bureau of Labor Statistics said payroll jobs provided by U.S. employers hit a new high of 138.463 million last month, topping the previous high of 138.365 million in January 2008.

That growth pleased Wall Street but left Main Street without great cause for celebration. The share of the labor force that is working or looking for work remained stuck at one of its lowest levels in modern history.

And, even after the monthly reported increase in average hourly earnings — up 5 cents to $24.38 — earnings are barely keeping pace with inflation.

“The sluggishness in wages is the weak link that is preventing the U.S. economy from fully expanding its wings,” said Gregory Daco, U.S. economist at Oxford Economics.

In an economy that’s about 70 percent fueled by consumer spending, job and wage growth are essential. But only 62.8 percent of the working-age population is working or looking for work. And the jobs available for them haven’t increased along with national population growth of about 15 million since the recession began.

Furthermore, average private-sector wages for all workers have risen just about 2 percent a year since the recession — barely even with average price increases.

According to one analysis, the average private-sector employee earned $838.70 a week in April 2014. Using current values, average earnings were $818.31 in January 2008, representing a pay gain of just $20 a week after six and a half years.

“So the economy is doing OK, but at some point we need the economy to do great,” said Dan Heckman, national investment consultant for US Bank Wealth Management in Kansas City. “We’ve recouped the number of lost jobs, but we haven’t kept up with population growth or wages.”

Consumer spending has grown at just about 2.2 percent a year since 2010. That’s more than a percentage point lower than the annual average growth in the 20 years before the Great Recession.

The wage situation offers “little catch-up for the middle class,” said William Spriggs, chief economist for the AFL-CIO. And, Spriggs noted, the federal minimum wage of $7.25 an hour “is now 30 percent of the average wage, a record low,” a fact that impairs spending by low-wage workers.

Even as the official unemployment rate has dropped to 6.3 percent, job market analysts note that the labor department’s most expansive measure of joblessness is 12.2 percent.

That double-digit figure includes people who are “marginally attached” to the labor force, such as those who would like to hold a job but have temporarily given up looking because they were discouraged and those who have involuntarily taken part-time jobs as last resorts.

Economists also note that recent job growth in part-time, temporary, and lower-paying service occupations, such as retail, restaurants and lodging, has eclipsed gains in many higher-paying job sectors.

For example, the well-paying construction industry, now at its highest job count since June 2009, had a still-high 8.6 unemployment rate in May this year. That’s down from 20.1 percent in May 2010, but it “remains vulnerable to sudden shifts in demand,” said Ken Simonson, chief economist for the Association of General Contractors of America.

Of particular concern is potential loss of federal highway funding this summer. That, and other government spending cuts also hurt job growth. Many federal, state and local agencies, including public schools, are continuing to cut jobs or not replace retiring workers, and total government employment is down by more than 1 million from four years ago.

Economists had predicted that 2014 would leave the Great Recession’s job losses in its rear view mirror. Unfortunately, the economy shrank in the first quarter this year — at a 1 percent annual rate — its only decline in the last three years. Harsh winter weather was blamed for much of the contraction.

Now, economists forecast annual growth of at least 3 percent for 2014. If that happens, hiring should continue and there should be more paychecks leading to more spending and more growth.

The Star’s wire services contributed to this report. To reach Diane Stafford, call 816-234-4359 or send email to

The national jobs snapshot for May

Net job growth: up 217,000 from April

Unemployment rate: steady at 6.3 percent

Number of jobless workers: steady at 9.8 million, with one-third unemployed for 27 weeks or more

Employment to population ratio: steady at 58.9 percent

Involuntary part-time workers: little changed at 7.3 million

Average work week on private payrolls: steady 34.5 hours

Average hourly earnings on private payrolls: up 5 cents to $24.38

Source: U.S. Bureau of Labor Statistics

Job gainers and losers in May

Industry sectors with notable job gains:

Professional and business services + 55,000

Health care + 33,600

Social assistance + 21,300

Leisure and hospitality + 39,000

Transportation and warehousing + 16,400

Sectors with little statistical change:

Manufacturing, mining and logging, construction, wholesale trade, retail trade, information, financial activities, government.

Source: U.S. Bureau of Labor Statistics

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