Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



U.S. Employment Finally Hits a New Record, but We Can't Ignore These Ugly Truths

It's been six and a half years since the American workforce last set an employment record. That record, of 138.365 million nonfarm employees, grew further and further out of reach as the United States plunged into a terrible recession. Then, as the recovery chugged along with underwhelming speed and strength, it began to seem that a new record might take a record-breaking amount of time to arrive. Our new record-high jobs tally announced today, at 138.463 million, has indeed taken far longer than any postwar recovery to claim its new high. At 76 months, it surpasses the four-year recovery from the dot-com collapse by over two years. Nonetheless, here we are:

Source: U.S. Bureau of Labor Statistics.

The official May jobs report from the U.S. Bureau of Labor Statistics finally pushed the nation over the top, showing a gain of 217,000 jobs, which came in ever so slightly ahead of economist and analyst expectation for an increase of 215,000 new jobs. This is roughly in keeping with a clear trend over the past few years of roughly 200,000 new jobs per month, as you can see when examining the three- and six-month rolling average for job gains against the month-to-month additions:

Source: U.S. Bureau of Labor Statistics.

Since this report is more or less as expected, American markets are reacting with typical modesty. The Dow Jones Industrial Average (DJINDICES: ^DJI  )  was up nearly 0.5% in late trading, with only one component trading (Pfizer) a full 1% lower than it opened the day. This is still better than previous reactions -- a narrow miss in March's jobs report prompted a similar percentage decline in the Dow.

However, the big jobs picture looks much different today than it did six years ago. For one thing, there are nearly 15 million more people in the United States today than in 2008. But there aren't quite that many more people ready to work, as the total labor force has only grown by 1.6 million people since the last employment peak:

Source: U.S. Bureau of Labor Statistics.

There are also 2.1 million more unemployed Americans six years after the last peak, which has resulted in an unemployment rate of 6.3% today, compared to a 5% unemployment rate at the start of 2008. More than twice as many people were unemployed for more than six months by the start of this month as reported being unemployed that long in 2008 -- today there are 3.4 million long-term unemployed Americans, compared to 1.4 million six years ago:

Source: U.S. Bureau of Labor Statistics.

Contrary to recent claims that we're not becoming a "nation of part-timers," there are 2.2 million more part-time jobs today than there were in 2008. And what about full-time jobs? There are 2.7 million fewer of those today than there were at the last employment peak. As a result, part-time workers now account for 17.5% of the labor force, up from 16.3% at the previous peak. During this time, participation in the labor force plunged from 66.2% in 2008 to 62.8% as of May:

Source: U.S. Bureau of Labor Statistics.

The trend toward part-time work can be largely explained by the employment gains and losses seen in various sectors of the economy since 2008. Of all the major sectors of the economy, none have grown quite so quickly as health care or leisure and hospitality, which both employ a large number of part-time workers.

Health care may not be known for its part-time workforce, but the BLS counts a number of low-paying "aide" positions as part of that sector, and the 3-million-plus-strong nursing workforce has historically been anywhere from 20% to 25% part time. The leisure and hospitality segment, which counts restaurants, bars, hotels, entertainment venues, and the like as its primary places of employment, boasts by far the shortest average workweek, at just 26.1 hours per week as of this May. In fact, the third-shortest average workweek belongs to the combined health-care and education sector, which keeps its employees busy for an average of just 32.8 hours a week.

Let's look at changes in employment among the economy's largest sectors now:

Source: U.S. Bureau of Labor Statistics.

The crash in construction is by now well known, as is the manufacturing contraction. These fields employed their workers for an average of 38.9 and 41.1 hours per week in May, respectively, and since the 2008 peak they've shed a combined 3.1 million jobs. Workers in both of these sectors made more per hour last month -- the average construction worker made $26.59 per hour, and the average manufacturing employee took home an hourly wage of $24.72 -- than did workers the two fastest-growing sectors, as the education-and-health-care sector reported an average hourly wage of $24.63, while the average leisure and hospitality sector employee brought home a paltry $13.78 per hour.

The American workforce set a new record. It was nothing to celebrate. By nearly every measure, the American workforce is in worse shape today than it was in 2008, before everything fell apart. Millions remain unemployed; millions are stuck in part-time jobs; millions more have simply given up altogether. Solving these problems will be cause for celebration. Today, we'll have to take what we can get.

Take advantage of this little-known tax "loophole"
Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 06, 2014, at 10:59 PM, RxPro wrote:

    Tax reform is the only way to fix these issues IMO. Its a simple formula: if you tax something, you will have less of it. If you subsidize something, you will get more of it. So why are our workers taxed the highest, while our single parents and unemployed are subsidized and people don't understand why those groups are growing while our full-time employees aren't?

    But I'll be honest with you. A rich person doesn't want tax reform, he wants more welfare, more food stamps, more unemployment benefits, etc. Why? because I'm not paying extra taxes on my long-term gains and qualified dividends, but every new person on welfare makes me seem just a little bit wealthier in comparison and keeps my money from being worth less if everyone else had some as well.

  • Report this Comment On June 07, 2014, at 4:29 AM, CraigWPowell wrote:

    Good reading.


    We see also overvalued stock market:

    Buffet index is currently 120( 70-80 is a good buy value):

  • Report this Comment On June 08, 2014, at 7:56 PM, stichmo wrote:

    While the new workforce record doesn't mean that the economy has fully recovered from the Great Recession of December 2007 to June 2009, it is one more sign that we continue to recover and are moving in the right direction.

  • Report this Comment On June 08, 2014, at 11:00 PM, SkepikI wrote:

    <We see also overvalued stock market:

    Buffet index is currently 120( 70-80 is a good buy value):

    Not to mention, no meaningful correction for a couple of YEARS.... very sobering

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2985762, ~/Articles/ArticleHandler.aspx, 8/29/2015 7:36:53 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Alex Planes

Alex Planes specializes in the deep analysis of tech, energy, and retail companies, with a particular focus on the ways new or proposed technologies can (and will) shape the future. He is also a dedicated student of financial and business history, often drawing on major events from the past to help readers better understand what's happening today and what might happen tomorrow.

Connect with Alex on LinkedIn or Twitter for more news and insight:

View Alex Planes's profile on LinkedIn

Today's Market

updated 22 hours ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:55 PM
^DJI $16643.01 Down -11.76 -0.07%