According to the latest report by the Bureau of Labor Statistics, the U.S. unemployment rate dipped to 7.4% last month, the lowest seen since December 2008, and down from 7.6% the previous month. This, in itself, is certainly brightening news for job seekers.
However, the bad news is that payroll growth was anemic; wages went down, and more frustrated and discouraged jobless headed for the sidelines, abiding the slowest job-market recovery since World War II.
Employers’ added 162,000 jobs to ‘non-farm’ payrolls in July, the Bureau of Labor Statistics reported on Friday, down from 188,000 in June, which was revised down from an initial reading of 195,000.
Together, revisions to May and June figures cut 26,000 jobs from payrolls, another discouraging sign of weakness.
The unemployment rate, in the interim, fell partly due to the 37,000 or so workers that simply dropped out of the labor force, as they understandably threw in the towel on continuing to look for work.
The report also revealed the labor-force participation rate, which measures the share of working-age Americans who are working, or consistently looking for work fell to 63.4% last month, uncomfortably close to a 35-year low.
The civilian employment-population ratio, that measures the number of working-age Americans that actually have jobs, was flat at 58.7%, near the lowest in 30 years, and down from over 63% before the recession.
The Fed has promised to keep its target interest rate close to zero in any case, until the unemployment rate is below 6.5 %. Even so, Ben Bernanke, conscious of the loss of workers from the labor force, recently suggested that he would have to keep the jobless rate in context, saying it “probably understates the true weakness of the labor market.”
The majority of the jobs that have been created throughout the long recovery are low-paying jobs, worsening income inequality, and keeping the economy sluggish.
Since the labor market bottomed out in early 2010, roughly, 6.7 million jobs have been added, and the unemployment rate declined from the peak of 10%, witnessed during late 2009.
Nonetheless, the job market could be a good distance from being totally recovered from the damage done by the Great Recession.
Adding in the number of jobs that should have been created in a healthy economy, we could have a “jobs deficit” of more than 8 million jobs, estimates the Economic Policy Institute, a left-leaning think tank.
The Hamilton Project, also a left-leaning think tank, estimates the jobs gap at nearly 10 million.
Based on 2013’ pace of job growth to date of 192,000 jobs per month, it would take almost ‘8 years’ to close that gap.
SNAPSHOT – CANADA’S LABOUR MARKET
- In June 2013, Canada’s employment was virtually unchanged, and the unemployment rate remained at 7.1%.
- During the first six months of 2013, employment growth averaged 14,000 jobs per month, slower than the average of 27,000 created in the last six months of 2012.
- Over this 12-month period, employment grew by 1.4% (+242,000), and the total number of hours worked increased by just 0.6%.
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