This morning’s jobs report from the Bureau of Labor Statistics showed 175,000 jobs were added in May. This rate of growth is right in line with the average growth rate of the last year (176,000) and is a perfect example of the ongoing slog in the labor market. At this pace, it will take more than six years to get back to the prerecession unemployment rate. The unemployment rate held roughly steady in May (ticking up half of a percentage point from 7.51 to 7.56 percent).
In her analysis, EPI economist Heidi Shierholz notes that the labor force participation rate ticked up to 63.4 percent, just one-tenth of a percentage point above its low of the downturn and far below its prerecession rate of 66.0 percent in December 2007. However, “this uptick shouldn’t be interpreted as an indication that job opportunities have improved enough to start consistently drawing missing workers—whose ranks are estimated at more than 4 million—back into the labor force,” Shierholz explains. “It is unlikely that workers who are out of the labor force due to weak job opportunities are going to join or rejoin the labor force in large numbers until job prospects are strong enough that they won’t face months of fruitless job search.”
Further, the very high unemployment of the last four years has exerted strong downward pressure on wage growth, since the existence of so many unemployed workers relative to job openings, combined with the lack of outside job opportunities for workers with jobs, means employers don’t have to pay substantial wage increases to get and keep the workers they need. Average hourly wages for all private-sector workers increased by 1 cent in May, and 2.0 percent over the last year.