According to this article this morning from CNN Money, the official BLS Jobs Report for May, due this Friday morning, will show that the US economy will finally have recovered all the jobs lost in the Great Recession:
Set your sights on this number: 113,000.
That’s how many jobs the U.S. economy needs to hit its break-even point, to finally recover all the jobs lost in the financial crisis.
Get ready, because we’re about to get there this Friday.
That’s when the U.S. Department of Labor will release its May jobs report, and the outlook is rosy. Economists surveyed by CNNMoney expect the U.S. economy added 200,000 jobs in May.
I guess that’s the good news. But as the article also notes, it is a purely symbolic measure:
Breaking even is a key milestone, but was a long time coming. It took just two years to wipe out 8.7 million American jobs, but it took more than four years to recover them all, making this the longest jobs recovery on record since the Department of Labor started tracking the data in 1939.
Plus, the jobs that have returned are not necessarily the same ones we lost, nor are they in the same regions.
Here’s the key – through all these four plus years of job growth to get back to where we were at the start of the Great Recession, we have been falling behind as it takes roughly 90,000 new jobs each month just to keep up with the new people entering the job market each month. If we take it back to the beginning of the Great Recession in December 2007, we are still in the hole on needed jobs by a bit over 7M (6.5 (years) x 12 (months per year) x 90K (jobs per month) = 7,020,000.)
The current month report from ADP continues the good news/bad news. The good news is 179K new jobs in the private sector (though fewer than “economists predicted.”) The bad news (although painted as good news by Reuters):
U.S. companies hired far fewer workers than expected in May, but an acceleration in services sector growth supported views the economy was regaining strength after sagging early this year.
While other data on Wednesday showed the trade deficit hit its widest point in two years in April, a rise in imports to record highs underscored the economy’s resilience.
Why is the increase in service sector jobs bad news? Because service sector jobs tend to be lower wage.
This blog post from the Washington Post’s Wonkblog from 8/31/2012 covers this:
The United States lost about 8.1 million jobs after the recession began in late 2007. The economy has since recovered about 3.3 million of those jobs, starting in early 2010. That, in itself, should alarm policymakers. The labor market is still in a deep, deep hole.
But in some respects, the situation is even bleaker than that. The types of jobs that have come back so far don’t seem to be paying as well as those that were lost.
A new report from the National Employment Law Project finds that low-wage jobs, paying $13.83 per hour or less, have dominated the recovery to date. In many cases, they appear to be replacing higher-paying jobs that were lost in the first place.
That article was not the first time the Post had noticed the low wage aspect of the “recovery” as I noted in this blog post from April 2011.
The CNN article linked at the top of the page also showed a little “moving of the goalposts” in the world of economic and jobs reporting. Buried way down at the bottom of the page were these two paragraphs:
Back in 2006 and 2007, the unemployment rate hovered between 4% and 5%, but that work level was associated with an overheating housing market. Aiming for that rate may not be an achievable goal now, as baby boomers retire and some of the long-term unemployed may be permanently out of work.
Instead, economists surveyed by CNNMoney now define ‘full employment’ in the economy as an unemployment rate at 5.5%. At that level, there’s still normal turnover in the job market, which is considered healthy. The unemployment rate was 6.3% as of April, and economists expect it could take at least two years to get to 5.5%.
The official “unemployment rate” is already a fiction as it does not account for the long term underemployed, those who are “self-employed contractors” and the people who have given up looking for work. It does show how bad things are though that the economists feel the need to redefine “full employment” while recognizing that we are still a couple of years away from achieving even this revised figure.
As Bloomberg was reporting on the trade gap in April hitting the highest point in two years, Reuters was reporting that WalMart is once again trying to push “American Made.” Not surprisingly, it is not going to happen easily:
When Walmart pledged last year to buy an extra $250 billion in U.S.-made goods over the next decade, it appeared to be just what was needed to help move America’s putative manufacturing renaissance from rhetoric to reality.
But suppliers trying to reshore production as part of the initiative by the world’s largest retailer are running into practical problems as they try to restart long-idled corners of U.S. manufacturing.
Companies that make the leap have to grapple with a host of challenges, including a shallow pool of component suppliers, an inexperienced workforce, and other shortcomings that developed during the country’s long industrial decline.
It is not at all a surprise that there are these types of problems. As the article further notes:
Now, the retailer is asking companies to come back home – though they need little prompting. The forces pulling production back to the United States are powerful and real and include lower domestic energy prices, increasingly competitive wage rates, the benefits of greater automation, and a renewed appreciation for the value of being able to respond quickly to shifting U.S. customer demands.
My bold. “Increasingly competitive wage rates” = squeeze salaries down to as close to minimum wage as possible.
CNN Money headline that 6 in 10 Say American Dream Is Unreachable is not a surprise at all.
And because I can:
Cross posted from Just A Small Town Country Boy by Richard Taylor
Picture from Mike Licht licensed under Creative Commons