"In some ways, the job market is tougher now than in any recession."
While she cannot claim that she's suffering for lack of work, Federal Reserve Chairwoman Janet Yellen may have never spoken truer words. Speaking at a conference in Chicago, the economist gave a boost to the stock market as she noted that, while the market was improving, there was "considerable slack" left before the economy could be considered to be at full health. This opportunity for growth rallied the Dow Jones more than a hundred points in less than an hour in the wake of the speech and could mean continuing gains in the near future.
Unfortunately, Yellen's words did not yet inspire the U.S. job market to follow suit as easily. Although her remarks were considered excessively dovish in nature (focusing on labor issues over inflationary issues), she noted five things that are still wrong with the U.S. job market.
1. Wages are still rising too slowly
Despite a recent strong showing in wages (increasing by their largest margin in over two years), compensation has increased only 2% per year. Compared to the last 50 years, this average is quite low, and taken in recent years is far below average wage growth.
Wages remain ahead of inflation (sitting at under 2% per annum) but historical inflation gained in harsher economic conditions keeps wage strength relatively weak by comparison.
2. Long-term unemployment is still high
This has been said before by the chairwoman. Although February saw over 90% of jobs lost in the 2009 recession recovered, this has not translated into work for nearly 4 million workers out of work for more than six months.
3. High numbers of part-time positions and lack of new jobs
While part-time workers are not either fully employed or adequately employed (that is, not underemployed comparative to qualifications), the number of part-time positions has soared while few new positions have been created, especially in established companies.
Businesses younger than nine years have added over 3 million jobs in 2013; businesses older than this have lost almost one-sixth of that in the same time period. With established businesses hesitant to add new positions, this has left approximately 7 million workers underemployed in part-time positions when nearly all of these would prefer to be working full time.
4. Few are quitting their jobs
On the prosaic level, this would be a good thing as it would indicate that workers are happy with their positions enough to not seek anything different. Unfortunately, this lack of voluntary quitting also indicates that workers are pessimistic about other potential job opportunities. (Ideally, a healthy job market would see natural employee turnover and a lack of it supports Yellen's belief that the economy can yet grow further.)
5. Labor force participation is down
Sixty-three percent of Americans are currently participating in the job market. Although this number would indicate a plurality, Yellen notes that it is "the same level as in 1978, when a much smaller share of women were in the workplace."
Yellen goes on to state that there is evidence to support the idea that workers leaving the workforce are not doing so voluntarily. If given the opportunity, she believes that many of them would happily rejoin the job market but have been forced out by market conditions.
All these workforce negatives are not to say that the economy is doing poorly, claims Yellen, only that there is room for improvement before we celebrate once more.