Yesterday the US Department of Labor, Bureau or Labor Statistics (BLS) released the Employment Situation Summary. The April 2014 Employment Situation Summary posted a new 5 ½ year low national unemployment rate of 6.3% which was a 0.4 percentage point drop from the previous month. With job creation during April came in with a surprising 288,000 jobs that were added to the economy in April and reporting there were 9.8 million jobless nationally. Stay focused on the headline and all looks good. But buried deep into the BLS report are concerns. Consider these points:
1. In March there were 10.5 jobless Americans so if the economy added 288,000 jobs there should be 10.2 million jobless. Instead the unemployed count is 9.8 million. National labor participation has dropped to 62.8% the lowest since 1978. Fair to say the unemployed continues to be so frustrated they drop out of the job search entirely and the national labor force actually shrinks by 400,000 in one month.
2. Those who have been employed for 27 weeks or more declined by 287,000. With 288,000 jobs created in April it might appear the long term employed grabbed almost all of the jobs. In all likelihood those who have not worked over 27 weeks were the first to give up.
3. The long term unemployed continues to quietly grow each reporting cycle. Those who are stay unemployed and reach 27 weeks or more will eventually drop out of the labor force. When they drop out and no longer counted a new group of unemployed reaches 27 weeks or more and will be counted for a few reporting cycles before dropping out of the labor force too. As a percentage of unemployed the long term unemployed has stayed above 35% for years.
4. Persons who are employed in a part time status count as fully employed in BLS reporting. There are roughly 7.5 million people who are wanting full time work but for economic reasons are working part time. This group of part time workers has been growing over the last 4 months.
5. Jobs created have not been high wage jobs. Many of the jobs created over the last year are low quality jobs. Over the last year job growth has been dominated in the services sector. Higher paying positions in goods producing sector has gown at a much slower pace over the last year. From 2007 to 2012 overall wages actually decreased by 1.3% and have yet to rebound.
6. The BLS reports always reserves the right to revise the report. BLS data is often reported as preliminary which can change. Meaning as good as a job creation or reduced unemployment sounds, the BLS can quietly change the report with revised data. So a welcoming report released with fanfare is later changed to something reflective of an ailing economy.
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