The addition of 288,000 payroll jobs to the U.S. economy reported Thursday by the Bureau of Labor Statistics is good news, but the labor market, while on the mends, is still not where it needs to be. More than six years after the 2007-2008 collapse in the nation's economic health, we are still far from a full employment economy. At 6.1 percent unemployment rate in June, we are still at least a full percentage point above the rate that could be considered near a full employment economy, where job seekers will have considerably less trouble finding jobs.
The gap between Gross Domestic Product and what it could be if we were at full employment is still somewhere near one trillion dollars. That is one trillion dollars of lost income and product per year for the U.S. economy, never to be recovered.
The drop in the June unemployment rate to 6.1 percent, down from 6.3 percent in the previous month is in the right direction, but is still barely a statistically significant improvement. The downward direction in the rate will have to be sustained in the months ahead to truly signal a healthy steady move towards full employment. One disturbing note in the June data is in the percentage of the adult population that is employed. At 59 percent in June, this ratio is still almost four percentage points below what it was in January 2008. And in June 2014, the number of adults not in the labor force increased by 111,000 from the previous month, and is now 239,000 more than where that number stood a year ago. The question arises as to whether some potential job seekers are deciding to drop out rather than to continue to look for jobs that they believe are not there.
Another disturbing note is the 275,000 June increase in the number persons with part time jobs for economic reasons, meaning they were working part time because they could not get full time work.
But to focus on the good news, in the June 2014 jobs report the number of unemployed persons dropped by 325,000 and the number who were unemployed for 27 weeks or more dropped by 293,000. The 6.1 percent unemployment rate for June is the lowest level since 2008. Total nonfarm jobs increased by 288,000 in June, and over the past 3 months nonfarm jobs have increased an average of 272,000 per month. That is the kind of job growth needed, and if sustained in the coming months will finally get us to a full employment economy.
But we are not there yet.