The labor market remained sluggish in May. Unemployment rose from 7.5% to 7.6%, while nonfarm payroll increased 175,000. Much of the job growth was concentrated in retail, food services and drinking places and temporary help. Manufacturing fell slightly.
The growth in employment is at about the same rate as has characterized the economy over the last year. This rate is simply not enough to make headway against the huge damage done by the financial panic and recession that started in late 2007. The key measure of labor market health, the employment to population ratio remains stuck at 58.6%. That ratio has been at this level since 2010. On the eve of the recession the employment to population ratio was over 63%. In the 2001 recession this measure never fell below 62%. The economy remains in deep trouble. We are treading water. Growth is barely covering population increases. The human cost of the recession continues. The simple logic of the numbers is that we have made no progress.
While the stock market reaches new highs, the labor market is stuck. While corporation profits continue to rise, millions of workers are caught in unemployment or part time job.
In recent months, the continuing employment crisis has impacted not only the unemployed and discouraged workers. It also has impacted the rest of us in the form of lower wages. On Wednesday (June 5) the Bureau of Labor Statistics released its revised report on productivity and hourly labor compensation for the first quarter of 2013. In the first three months of the year, hourly labor compensation actually fell at an annual rate of 3.8%. This is the largest quarterly drop since records began in 1947. In real terms the decline is 5.2% at an annual rate.
Faced with this continuing challenge, what policies are being followed by the national government? Unable to move out of Congressional deadlock and caught in the dead end of sequestration, the federal government is now actually making the problem worse. The latest job report shows an actual decline of 14,000 federal jobs in the last month, a decline of over 50,000 jobs in the last year. At a time when the federal government should be mounting an aggressive jobs program to put millions back to work, it is instead destroying jobs. The logic is baffling. It is time for a change.