Policy Feature Issue: June Jobs Report
On Friday, the Bureau of Labor Statistics (BLS) released its June monthly jobs report. Though nonfarm payroll employment increased by 195,000 in June, the unemployment rate remained unchanged at 7.6%. The June jobs report suggests that although overall employment is increasing, the economic recovery remains tepid and lacks serious momentum. The Department of Treasury’s recent decision to delay the Obamacare’s employer mandate is a sign that the administration is worried about how Obamacare will negatively affect an already slow economic recovery.
Facts You Need to Know:
- The unemployment rate remained unchanged from May at 7.6%. The number of unemployed persons increased slightly from 11.76 million in May to 11.77 million in June.
- Long-term Unemployment (those unemployed for more than 27 weeks) decreased from last month to approximately 4.33 million Americans.
- The Labor Force Participation Rate, which identifies the number of people who are active participants in the labor force (relative to the total population), remained nearly unchanged from May at 63.5%, an increase from 63.4% in April. The Employment-Population Ratio, a metric which establishes the raw employment rate, increased slightly from 58.6% in May to 58.7% in June.
- Average hourly earnings for all employees increased by 10 cents to $24.01. In the last year, average hourly earnings have increased by 51 cents (2.2 percent).
Why Does a “Pro-Growth” Agenda Matter?
- Though the numbers reported for June are slightly encouraging, the fact remains that there are 2.2 million fewer people employer and 1.6 million less private sector jobs than in 2008 when the recession began. The gap in real GDP compared to average recoveries is still significant. The current numbers have not put to rest concerns about the long-term health of our nation’s economy.
- The Employment-Population Ratio (EPR) is still stuck at a level significantly lower than its peak in 2008. Overall job growth is sufficient to keep up with population growth, but only barely. The EPR has only increased by one-fifth of a percentage point since October, 2009 when the U.S. experienced peak unemployment. Americans are still slow to engage the labor market in the search for wage-earning employment, which ultimately limits economic growth potential.
- Labor force participation still remains at its lowest levels since the late 1970s, which distorts the unemployment rate. If Labor Force Participation remained unchanged from the recession, the unemployment rate would be well over 10 percent. Long-term economic growth requires robust labor force participation which would broaden the tax base and increase revenue organically.