The U.S. economy continued to churn out low-paying jobs in June, as the weakest labor-market recovery since World War II ground sluggishly ahead.
Employers added 175,000 jobs to nonfarm payrolls in May, the Bureau of Labor Statistics reported on Friday, up from a downwardly revised 149,000 in April. The unemployment rate rose a tick, to 7.6 percent from 7.5 percent.
"Recent progress on jobs is par for the course in a lackluster expansion," Jim Baird, chief investment officer for Plante Moran Financial Advisors, wrote in an emailed note. "The labor market continues to trudge forward at a solid, though unspectacular, pace -- not unlike the economy as a whole."
For the U.S. stock market, at least, the report was perfect. The job gains were better than the 163,000 economists expected, according to a Bloomberg tally. At the same time, the rise in unemployment means the Federal Reserve may be in no hurry to slow down its policy of buying bonds to pump cash into the economy, a scheme known as "quantitative easing." Anxiety about an end to QE has thrown global financial markets into relative turmoil lately.
Stock futures were modestly higher immediately after the jobs report. Traders had been braced for a disappointing report after some advanced warning signs of job-market trouble, including a recent rise in new claims for unemployment benefits.
One bright spot of the report was the fact that the unemployment rate increase was driven mainly by 420,000 people coming off the sidelines and joining the labor force. Several times in recent months unemployment has fallen simply because large numbers of people have given up looking for work, taking themselves out of the labor force, meaning they can no longer be counted as unemployed. For the past two months they have been tiptoeing back into the labor force, a sign they have higher hopes for job prospects. Still, June's labor-force participation rate of 63.4 percent is significantly below the 66 percent that prevailed before the recession. And the total number of unemployed people rose to 11.8 million from 11.7 million.
And the jobs these people are finding are of the low-paying variety, as has been the case throughout the recovery. Job creation in June was concentrated in sectors like leisure and hospitality, temp work and retail sales. The higher-paying factory sector actually shed 8,000 jobs in June, while the government sector cut 3,000 jobs. Since the recession ended, more than half of all new jobs have been in such low-paying sectors, according to recent economic studies.
Wages were mostly stagnant in June, with average hourly earnings up just a penny. Over the past three months, wages have risen at a 1.2 percent annualized pace, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. That is not enough to keep up with inflation. Again, this has been a hallmark of the recovery -- wages have been mostly stagnant, even as corporate profits and stock prices have hit record highs.
Other measures of the job market were similarly downbeat. The unemployment rate for African-Americans rose to 13.5 percent from 13.2 percent. The U-6 unemployment rate, which includes the jobless and people who are working part-time because they can't find anything better, fell only fractionally to 13.8 percent. And the number of long-term unemployed -- people out of work for 27 weeks or more -- held stubbornly at 4.4 million.
The economy has now added 6.3 million jobs since the labor market bottomed in February 2010, but is still 2.4 million jobs shy of its peak in January 2008. Thus this is the slowest labor-market recovery since World War II.
Some economists estimate that at least 2 million jobs may be missing because of the austerity measures that the government sector has undertaken since the recession ended, including the biggest federal-government spending squeeze since the end of the Vietnam War. And those jobs may not be coming back any time soon. At the current pace of job growth, the economy may not be back to full employment until 2021, estimates the Economic Policy Institute, a liberal think tank.