U.S. Economy: 5 Problems with the June Jobs Report
The U.S. jobs report for June looks good. Or does it? On July 2nd, the Bureau of Labor Statistics released its job market report for the month of June. With 221,000 jobs added and the unemployment rate as low as 5.3%, there seemed to be steady growth in the U.S. economy.
However, if you dig deeper, you’ll see that the situation is a lot more worrisome than the headline numbers suggest. Here are five terrible numbers from June’s job report. (Source: Bureau of Labor Statistics, July 2, 2015.)
Participation Rate 62.6%
The labor force participation rate refers to the percentage of working age people in an economy that are either working or looking for work. The rate dropped by 0.3% to 62.6% in June as a whopping 432,000 people decided to leave the labor force altogether. Last time the participation rate was this low was in 1977.
6.5 Million Worked Part Time, but Wanted Full Time Jobs
In June, there were 6.5 million workers who wanted to work full time, but could only work part time due to economic reasons. The substantial lack of full-time positions shows that the U.S. labor market is really not as optimistic as the headline numbers suggest. These involuntary part-time workers are likely to have serious financial burdens because part-time jobs today usually do not pay enough to make ends meet.
653,000 Discouraged Workers
Discouraged workers are unemployed and have given up looking for work because they believe there are no jobs for them. They are not counted toward the labor force and hence not part of the unemployed when calculating the unemployment rate. The number of discouraged workers in June was 653,000—basically unchanged from a year ago. If you add the discouraged workers to the unemployed, the unemployment rate for June rises to 5.7%.
60,000 Downward Revision on April and May’s Reports
June’s labor market report also revised the number of job gains in the previous two months. April’s change in nonfarm payroll employment was revised down from +221,000 to +187,000. May’s change was revised from +280,000 to +254,000. In total, job gains in April and May were 60,000 lower than previously reported.
-349,000 in Full-Time Jobs
Despite the rosy headline, number of job gains, and low unemployment rate in June, the number of full-time workers declined substantially. Month-over-month decline in full-time employed workers dropped a staggering 349,000. Moreover, the number of full-time employed workers was at 121.1 million in June—which is still a long way to go to climb back to the 121.9 million of November 2007.