May jobs report: The labor market takes a big step backward
Anyone hoping for a healthy labor-market recovery is going to be sorely disappointed by the May jobs report. The U.S. economy added just 69,000 jobs last month — far below expectations. The unemployment rose to 8.2 percent. And the details of the report are even more dire.
The Bureau of Labor Statistics revised down its job estimates for previous months, too. Remember when everyone gulped in April because the economy added only 115,000 new jobs? Turns out that was actually just 77,000 new jobs. March also got bumped down, from 154,000 to 143,000. For the past two years, BLS revisions have frequently been upward. That streak appears to be broken.
Much of the job carnage seems to be driven by the construction sector, which lost 28,000 jobs last month. As Jed Kolko of the housing research firm Trulia notes, construction jobs now make up just 4.1 percent of all employment — the lowest level since 1946. And the United States hasn’t added any new construction jobs, on net, since the beginning of last year. There’s still a massive hangover from the housing bubble.
Meanwhile, the number of long-term unemployed — workers who have been out of the job for 27 weeks or more — rose from 5.1 million to 5.4 million in May. Why is that troubling? There’s a growing body of research suggesting that people who are out of work for extended periods of time suffer all sorts of adverse health affects and have more trouble reentering the workforce.
All told, the U.S. job market appears to be sputtering out. In the past four months, the economy has added an average of 137,000 jobs per month. That’s barely enough to keep up with new entrants into the labor force. At that rate, according to this calculator from the Hamilton Project, we won’t get back to full employment until 2025.
So, what now? Will the Federal Reserve step in? Plenty of economic commentators, like Fed Watch’s Tim Duy, have been wondering if more stimulus and quantitative easing might be on the way. Friday’s jobs report will certainly stoke those rumors. One point to note here: Core inflation was up just 1.8 percent in April and has been unchanged over the past year. The central bank is more than succeeding in whipping inflation. But as for the the other part of its dual mandate — bringing the unemployment rate down — the Fed hasn’t been anywhere near as successful.