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Jobless Rate Stuck, But Employment Gains Remain Robust

A window washer uses a squeegee to clean windows on the morning of the summer solstice in New York's Times Square, June 21, 2013

The payroll employment report brought more good news in June as private employers added 202,000 jobs. A small decline in government payrolls meant that total payrolls rose 195,000. Upward revisions in job totals for April and May added 70,000 to the size of payrolls in May. Since the beginning of the year employers have added a total of slightly more than 200,000 payroll jobs a month. After private payrolls began to grow in March 2010 they increased for 40 straight months by an average of 180,000 jobs a month. Government payrolls have shrunk 15,000 a month over the period, offsetting about 9% of the employment gains in the private sector.

Recent payroll gains are considerably faster than what is needed to push down the unemployment rate. The Census Bureau’s estimates of population change imply that about 80,000 new jobs are needed in an average month to keep up with the growth in the working-age population. The unemployment rate remained unchanged in June, however, and it has only dipped 0.2 percentage points since the end of the last year. The main reason the unemployment rate has changed little so far this year is that BLS’s household survey, which is the source of our unemployment estimates, shows much smaller employment gains than the employer survey. Since December of last year the household survey indicates that the number of adults who are employed has increased about 125,000 a month. The payroll survey shows employment gains of 202,000 a month. The big discrepancy between the two numbers explains why the unemployment rate has fallen little since last December even though payroll gains have been robust. In the last three months, however, average employment gains in the household survey have been even faster than those shown in the employer survey. In the second quarter, both surveys show healthy job gains.

June payroll employment rose fastest in leisure and hospitality, professional and business services, retail trade, and private educational and health services. Since the end of 2009 about 84% of all payroll gains have been concentrated in these four industries. Job gains in manufacturing account for about 8% of net payroll growth. Payroll changes in other industries have contributed modestly to employment gains or have offset gains in the industries just mentioned. Recently, however, employment gains in manufacturing have stalled. Since March manufacturing payrolls have shrunk about 6,000 a month.

The fastest growing industry since the start of the recovery has been professional and business services. This sector accounted for nearly a third of all payroll gains since the end of 2009. Temporary help services, which is a subsector of business services, has added 786,000 to its payrolls since December 2009, or about 1 out of every 8 net new jobs created since that month. It accounted for 9,500 out of the 53,000 new jobs created in the professional and business service sector in June.

The bad news for workers is that real wages have stagnated.  In May 2013 the real hourly pay of employees on private-sector payrolls was unchanged from its level in December 2009. In light of the hardship suffered by the nation’s 11.8 million unemployed, most Americans with a job consider themselves lucky. However, they have not seen an improvement in their real hourly wage since the recovery began.
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