JUDY WOODRUFF: The unemployment rate in the U.S. dropped to 6.1 percent in June, its lowest point since just before the financial crisis of 2008. That news came along with a strong hiring report, 288,000 more jobs last month, well above most expectations, and stirring hopes, yet again, that the momentum in the jobs market is here to stay for a while.
The NewsHour’s economics correspondent, Paul Solman, has the story, part of his ongoing reporting Making Sense of financial news.
PAUL SOLMAN: Whopping job gains, upping the average of the last five months to more than 200,000, a record last seen in the tech boom of the late ’90s. On a visit to a tech startup hub in Washington, President Obama accentuated the positive.
PRESIDENT BARACK OBAMA: It should be a useful reminder to people all across the country that, given where we started back in 2008, we have made enormous strides, thanks to the incredible hard work of the American people and American businesses.
PAUL SOLMAN: Economists like Boston College’s Matthew Rutledge were taken by surprise.
MATTHEW RUTLEDGE, Center for Retirement Research at Boston College: A lot more positive than I would have figured. You know, we’re expecting our usual 200,000 extra jobs, and it actually came out more like 300,000 extra jobs. And this is great news.
PAUL SOLMAN: But the latest report on the economy as a whole, on GDP, is that GDP actually shrank.
MATTHEW RUTLEDGE: This is the exact opposite of what we were getting earlier in the recovery, where we were getting GDP growth, but no job growth. Now we’re getting job growth, but it’s not exactly clear why.
It doesn’t seem like people are producing anymore. Maybe they’re just finally getting around to hiring people back.
PAUL SOLMAN: Indeed, the employment picture seemed bright right across the board, more jobs at restaurants and bars, in business services, manufacturing, health care, architecture.
Our own inclusive U-7 un- and under-employment number was the lowest since we began calculating it at the start of 2011. Any clouds? Well, most of the new jobs seemed to be part-time. And the percentage of the population officially in the work force remained at a low 60 percent for the third straight month.
Particularly striking to me reading this morning’s numbers was that the population grew the usual 200,000 per month, but the civilian labor force didn’t grow at all.
MATTHEW RUTLEDGE: Well, we know that the baby boom is just reaching that magic retirement age, 62, 65, 66. And so we’re seeing some of those people drop out. We’re seeing them retire on schedule. But a lot of people have not really been able to afford to retire. Some of them are finding jobs. Some of them are sticking with their job search longer than they would have in the past.
PAUL SOLMAN: How did age affect job growth in last month’s report?
MATTHEW RUTLEDGE: So we saw huge job growth among younger workers; 25-54 went up to something like 500,000 to 600,000 extra jobs. Among people that are 55 and older, it barely went up, less than 100,000 new jobs. And the unemployment rate for men 55 and older actually went up a little bit.
PAUL SOLMAN: That rate went up to 4.9 percent in June, while the number of unemployed men over 55 rose to nearly 900,000.
MATTHEW RUTLEDGE: What that could reflect is that people with the best job prospects, they have been able to take that financial portfolio, they have been able to take their more valuable house, they have been able to take that pension coverage, and walk away, whereas the people that are left, the people that are still looking for a job 55 and older, are the people that have to continue to look because they don’t have the option to drop out.
And so that’s why the unemployment rate is a little higher than it would have been otherwise.
PAUL SOLMAN: Research by Professor Rutledge and others has shown that unemployed older workers remain jobless for longer than their younger counterparts, scarred by having been laid off at a later age. As a result, when they do find work, it tends to be for a lot less money.
MATTHEW RUTLEDGE: They’re going to be especially worse off relative to younger workers, who are able to bounce back a little bit better. So not only are older workers looking for a job for longer. They have more difficulty even finding that job. The job they find won’t necessarily be as good as the one they just left.
PAUL SOLMAN: Why?
MATTHEW RUTLEDGE: It might just be that there’s a lot of people out there. You don’t have to hire an older worker if there’s a younger worker that’s cheaper and maybe at least you can perceive to be more adjustable, more trainable.
PAUL SOLMAN: If the economy continues to add more jobs at this pace, though, the so-called reserve army of the unemployed will continue to thin, providing hope even for those most scarred by the great recession.