Today the Bureau of Labor Statistics released the June jobs report. On first glance it looks promising with the addition of 288,000 new jobs and the unemployment rate dropping to 6.1%. Upon further inspection the good looking report shows some that there is still weakness in the labor market and more can be done to improve it.
Two numbers other than the change in nonfarm payroll employment (288,000) pop out as being important in interpreting these numbers.
First is the change in the number of unemployed persons. The number has decreased by 325,000. This decrease looks good but once compared with the number of people obtaining jobs it shows that people are still dropping out of the workforce. With a still growing population, though aging, it is expected that in a good economy the increase in nonfarm payroll employment would at least match the the decrease in the number of unemployed persons. This overall decrease in people looking for jobs means that there are still discouraged workers dropping out of the labor force.
The second troubling is the increase of people employed part time for economic reasons, (i.e. the underemployed). This number increased by 275,000, which means that most of the job creation came from the creation of part-time employment rather than full-time jobs. This is not the report of the robust recovery Americans deserve.
June’s jobs report was generally positive news, but don’t be fooled: this labor market remains far too weak to propel major growth.