The Jobs Report for May: A Mixed Bag

There was mixed news in the latest government job reports. The Bureau of Labor Statistics (BLS) household survey of workers in May brought the bad news. For one thing the official unemployment rate rose by .3 to 3.7%. That is still pretty low by conventional standards, but it is moving in the wrong direction. And so are other numbers. The unemployment rate for Black workers jumped from 4.7% to 5.6%; the rate for disabled workers increased from 6.3% to 7.8%; and the number of unemployed people grew by 440,000.

Also, a continuing problem is revealed in the real unemployment rate calculated by the National Jobs for All Network. That number adds to the official rate the uncounted job-wanters and part-timers who want full-time work but cannot find it. The resulting full-count unemployment rate thus rose from 8.7% to 8.9%–far above the official rate and rising.

The good news was in the survey of business and government employers that showed jobs rising by 339,000.  We are almost 4,000,000 jobs above where we were just before the pandemic recession. That’s a plus. But had there been no recession, we’d probably have another two or three million jobs.

Two Different Worlds?

Do you want to be an optimist or a pessimist about job markets? There was, as sometimes happens, a large difference between the numbers from the survey of households and those from the survey of business and government employers. As mentioned, the latter showed a positive increase of 339,000 jobs. But the government’s survey of households revealed that the number of employed people fell by 310,000.

How can two surveys of workers in the same country yield such different outcomes? The BLS rarely deigns to explain such differences. A partial answer has been suggested by economics writer Noah Smith. He reminds us that the survey of jobs that comes from employers does not include the self-employed. An example of such people are those Uber drivers whom the company has struggled mightily to define and exploit as independent contractors. As it turns out the number of unincorporated self-employed workers fell by 414,000 in May. These leavers do not show up in the government survey of employers, but they are in the household survey. Their losses must be part of the decline of employed people in the household survey. But why the decline was so big is not known to me.

Other Alerts

Initial weekly claims for unemployment benefits have been rising, and they reached 261,000 this month. That level is far below pandemic heights (almost 5,000,000 in April of 2020), but it is higher than the 200,000 to 210,000 average typical in 2022 and early 2023.

Another alert is that growth in the Gross Domestic Product slowed in the last two quarters. In the first quarter of this year national output grew just 1.3%. That’s close to recession levels. But things are kinda crazy-jumpy in this area. Growth was negative in the first two quarters of 2022, the authorities did not declare a recession; and, surprise, the economy began to grow again.

Economic growth is wobbly, and much depends on the Federal Reserve. The Fed has raised interest rates for months to restrain economic growth and inflation, and they are succeeding. The rate of consumer price increases is way down. There is no need for the Fed to raise interest rates again and risk pushing the economy into recession. (Breaking news: the Fed will not raise interest rates in June, but says it plans more hikes in the future.) By the way, it is not as though worker pay has been going through the roof. For rank-and-file employees, real (after-inflation) hourly pay in May was just 1.3% more than a year ago.

Is It Hard to Find a Job?

In some respects, labor markets are still pretty tight, and that is good for workers. The number of job vacancies rose a bit to10.1 million in April. If those are real vacancies, that high total is not evidence of a recessionary trend or of an increasingly difficult labor market for job searchers. Certainly, some employers are cleaning house, notably in the tech sector. But many still claim to have a lot of openings.

How about a worker’s sense of confidence about finding a new job in this climate? Worker quit-rates, a possible indicator of confidence, are down a little from last year to 3.8 million a month. But that is still higher than in any pre-pandemic year for which we have the data, and that goes back to December of 2000.

Will Manufacturing Rise Again? We Keep Hoping and Talking

A big revival of manufacturing jobs could make life better in many struggling communities. We are never going back to the glory years of the mid-20th century, but how about two million new good jobs? In a recent column (June 6, The New York Times), Paul Krugman highlighted the surge of investment pouring into the manufacturing sector, fueled by two pieces of Democratic legislation: the Inflation Reduction Act and the CHIPS Act.

That investment has not yet had much impact on factory employment. Rank-and-file manufacturing jobs have recovered from the pandemic crash, but they are still barely above 2019 levels. They aren’t close even to the semi-good old days of 12,000,000 jobs in the 1990s. That level of manufacturing jobs was after much of the damage had already been done, but before the full brunt of “free trade” and advanced automation methods took hold.

For now, fingers crossed that we will soon get a lot of good jobs producing things that do no significant harm to human beings, animals, and nature.