May Jobs Report: Good Growth, Significant Problems Remain

EXPERT COMMENTARY

May Jobs Report: Good Growth, Significant Problems Remain

By Keith Hall |
Jun 06, 2014

Arlington, Va.—The Bureau of Labor Statistics today announced that while the economy added 217,000 jobs in May, the labor force participation rate remains at an alarming 62.8 percent—its lowest level in more than 35 years.

“The strengthening of payroll job growth is good news, but significant problems remain in the labor market,” said Mercatus Center Senior Research Fellow Keith Hall.  Hall, formerly BLS commissioner and Chief Economist for the White House Council of Economic Advisors, is recognized as one of the top labor economists in the country. 

Hall continued:  “The good news is that so far this year job gains average 214,000 per month, which is modestly higher than last year’s average of 194,000 jobs per month. And the unemployment rate remained unchanged at 6.3 percent.

“The bad news is our historically low labor force participation.  The rate in May was unchanged at 62.8 percent and continues to be at its lowest level in more than 35 years. Although the labor force participation rate can be volatile from month to month, this critical job market measure is failing to bounce back from the recession and represents a major concern.

“The labor force participation rate for the prime working age population between 25 and 54 years old remained unchanged at a low 80.8 percent. The participation rate for the prime working age population is unaffected by aging baby boomers.  It averaged just 81.0 percent last year and has declined now for five straight years, from 2009 to 2013.

“Although at 138.4 million, the number of payroll jobs has finally surpassed its prior peak of 138.4 million (January 2008), the labor market is far from fully recovered. The working age population has grown by 15 million people since then and we remain about 10 million jobs short of our pre-recession employment rate.

“We certainly need the kind of job gains in today’s report, but we also need the labor force to expand and structural improvements in the economy, or this historically slow recovery will fail to pick up steam.”

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