Thoughts on the May Jobs Report
On June 4, the Bureau of Labor Statistics release the jobs report, formally known as “The Employment Situation,” for May 2010. The headline numbers were that nonfarm payrolls grew by 431,000 workers and the unemployment rate fell from 9.9% to 9.7% as compared with April 2010. The Obama administration cheered these numbers as “moving in the right direction,” but a closer looks reveals anything but "green shoots."
First of all, 411,000 out of the 431,000 new payroll jobs were attributable to temps hired by the U.S. Census. All of these workers will lose their job within the next few months as the 2010 Census winds down. Without these temps, a meager 20,000 new payroll jobs were created during May. But, it gets worse, because 31,000 new payroll jobs were in temporary help services, so that full-time employment actually declined in May by 11,000 workers.
With regard to the decline in the unemployment rate, this decline was totally attributable to unemployed workers giving up and moving into the discouraged ranks, which are not considered part of the labor force. While unemployment fell by 287,000, 493,000 workers “left the labor force,” moving into the ranks of “discouraged workers.” In fact, total employment actually declined by 35,000 workers. These are not the sort of trends that we should be heralding.
In other distressing news, the ranks of the long-term unemployed, those out of work at least 26 weeks, grew by 47,000 to 6.76 million. The average duration of unemployment rose to 34.4 weeks in May from 33.0 weeks in April.
Perhaps the only really good news was that the number of persons working part-time for economic reasons fell by 343,000, but it appears that most of these workers left the labor force rather than moving into full-time jobs.
Closely related was the decline in U-6, the broadest measure of unemployment, from 17.1% in April to 16.6% in May. However, this change also likely reflects the almost half million workers who left the labor force in May.
