If ever America were to get a present for its 238th birthday, June’s jobs report might qualify.
The economy added 288,000 jobs, and the unemployment rate dropped to 6.1 percent, its lowest since September 2008, when Lehman Brothers collapsed and the financial crash began.
The NewsHour’s Making Sen$e “U7” measure of unemployment, which adds to the officially unemployed both part-timers looking for full-time work and workers who say they want a job but haven’t actively looked for more than a year, also declined — to 14.23 percent — its lowest since we started calculating it in 2011.
June’s payroll numbers, which come from the Bureau of Labor Statistics’ “establishment survey” of employers, exceeds Wall Street’s consensus projection of 215,000 jobs, and more importantly, it marks the fifth straight month of average payroll gains over 200,000. That hasn’t happened since the tech boom of the late 1990s.
The unemployment rate, from a separate survey of households, has come a long way from the 7.8 percent it stood at a year ago. Unlike most of 2013, when unemployment declined for what many economists called “the wrong reasons” — folks dropping out of the workforce — June’s 0.2 percent decline came with some 400,000 more people reporting that they were employed than did last month. (It’s important to remember, though, that these numbers are projections from a sample of the population — one household per 2,000 in the country — and are therefore subject to statistical error.)
On the heels of sluggish economic growth in the first quarter, Thursday’s report, released a day early this month because of the holiday, was widely heralded as a sign that the economy is continuing to recover. Economists and journalists greeted June’s headline numbers with positive, even celebratory, responses:
Payrolls +288k! April revised from +282k to 304k May revised from 217k to 224k Unemployment down to 6.1% Yabadabadu!
— Justin Wolfers (@JustinWolfers) July 3, 2014
YOU get a job, and YOU get a job
— Josh Barro (@jbarro) July 3, 2014
Have a great 4th of July America! This is the moment we've been waiting for.
— Joseph Weisenthal (@TheStalwart) July 3, 2014
But as with all fireworks, you don’t see the full display until after it’s up into the sky. The jobs report, likewise, contains some 25 tables that reveal more than usually gets reported.
Returning to that labor force participation rate, for example, it held steady for the third month in a row at 62.8 percent. A big part of that story, as we’ve reported before, is baby boomers retiring. That kind of labor force exit is to be expected, since some 10,000 baby boomers a day are hitting age 65 (or the current Social Security full retirement age of 66, for that matter). But as frequent contributor to this page Dean Baker, co-director of the Center for Economic and Policy Research, reminded us Thursday, much of that decline has also been among prime-age workers who have every reason to be looking for a job.
Last month’s labor force also grew by a lot less than the previous month. Yes, some of those staying out of the labor force are newly minted retirees, says Matt Rutledge, of Boston College’s Center for Retirement Research. But, he added, the people who can’t afford to retire are having trouble finding a job. For these folks, the employment outlook isn’t as rosy as it is for the rest of the population. The unemployment rate for men over age 55, for example, actually increased last month, said Rutledge.
Baker, though, is optimistic that with continued job gains like we’ve seen for the past couple of months, some prime-age workers will return to the labor market.
But regardless of how many jobs are created, there’s no guarantee that they will go to the population that Rutledge worries about. “The people who are left, who are still looking,” he said, “don’t have the option to drop out, and that’s why the unemployment rate is a little higher” for that population. Rutledge studies what’s called “scarring” — how losing one job permanently damages or scars your ability to get another one — and as we’ve explored on the NewsHour, this has been particularly pronounced among older workers. (Watch Paul Solman’s interview with Rutledge on the NewsHour.)
So what kind of jobs are people down on their luck accepting? June’s household survey shows a large increase in the number of people working part-time for economic reasons. These are the so-called “involuntary” part-timers who say they’d rather have a full-time gig.
But does that mean that the number we’re all so excited about (288,000 jobs!) is made up of not-so-good, part-time jobs? No. The gains in Thursday’s report are broad-based and in many healthy, traditionally well-paying sectors, including professional and business services, and health care.
Furthermore, remember that the payroll gains and the number of people who report working part-time come from two different surveys. If there really were such an uptick in part-time employment, Dean Baker said, you’d likely see something in the establishment survey to explain that story. There isn’t anything. It’s much more likely, Baker thinks, that the rise in involuntary part-time workers stems from a statistical error, especially because part-time worker figures are notoriously erratic. May’s involuntary part-time workers, for example, were down by 134,000, so it’s possible that this month’s increase evens out the previous month’s decrease. As with any detail, in any of these BLS reports, Baker cautioned, as he has often cautioned in the past, focusing on one month’s numbers is a mistake.
The good news is that, year-over-year, the number of involuntary part-time workers has decreased by about 637,000.
But one more grain of salt with which to digest Thursday’s report comes from the Brookings Institution’s Justin Wolfers, who reminds us that the margin of error for the strong headline number is large enough to erase talk of stronger gains.
Remember, margin of error is +/-90k. If today's number was 198k instead, wouldn't be much talk about an acceleration.
— Justin Wolfers (@JustinWolfers) July 3, 2014
That said, it is the long-term trend that counts. “This is the most positive report since the recovery,” said Baker, not just because of one month’s strong numbers, but because it comes after several prior months of strong job growth, so it’s not as if the jobs added in June were “borrowed” from other months that posted low growth.
With that, then, America: bottoms up.