The June 2014 Non-Farm Payrolls numbers lived up to elevated expectations from the ADP forecast. Across June 288,000 net new jobs were created and the official, U-3, unemployment rate declined by .2% to 6.1%. June represents a very positive month for jobs, this is without doubt. However, there are some disturbing elements in the jobs report that suggest that the underlying reality is improvement more slowly, and less dramatically, than the numbers suggest. Hence our tip of the hat to Mark Twain and the wisdom of his saying, lies, damn lies and statistics.
Across June it is clear that folks still actively engaged with the labor force were able to get jobs. This is great news. Far more worrisome is that the long-term employed are giving up in droves and vanishing from our rolls as jobless benefits run out. Additionally, there has been an increase in the involuntary part-time population. This increase in involuntary part-timers was almost equal to the entire net jobs increase in June. We saw 275,000 people added to the part-time and not by choice, rolls as employment increased by 288,000. Likewise, we saw a large decline in long-term unemployed, out of work for 27 weeks or longer. Unemployment reduction is driven by thousands not getting jobs, and deciding to leave the official count.
June 2014 Non-Farm Round-Up (BLS July 03 Non-Farm Payroll Release)
Net New Jobs 288,000 Unemployment (U-3) 6.1% Unemployment (U-6) 12.1%
Long Term Unemployment decreased by 293,000
Involuntary Part-timers increased by 275,000
Labor Force Participation Rate 62.8
Employment Population Ration 59.0
We will continue or establish focus on wages. We see a complete lack of wage growth, now in its 6th year, as the missing focus of our discussion of recent employment trends. We saw a mighty $.04 increase in hourly wages for non-supervisory workers and a stagnant workweek, again. This computes to an average increase in weekly earnings of $1.38. Thus, the entire increase in June average wages will be consumed by a portion of one gas tank refill at recently raised prices at the pump. We continue to see this as a real break on growth.
The above labor force metrics suggest that our recovery draws some of its statistical strength from the development of a structural informal sector. We are seeing the US develop a two tiered labor market. There is the diminished official sector with improving numbers and a growing pool left out, left behind and under reported. This is a very worrisome trend. Compounding our fears is the large and long-standing portion of young people who can't and don't start climbing career and earnings ladders. These folks are entering the labor market straight into our growing informal labor economy. This weakens their ability to earn, save and evolve. Additionally, we are seeing a rising pool that lives outside standard metrics and reducing our ability to gauge economic conditions and health.
The rise of involuntary part time work, with millions being added monthly, is also worrisome. Many of these folks will be unable to advance, will have unsteady earnings and are likely to be slowed in their savings, advance and economic participation.
It was a strong report. The questions loom large. There is mounting evidence that we are failing to measure more even as the numbers improve.
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