All the jobs are back … please, hold your applause.

According to the Feds, the economy added 217,000 jobs in May … that’s good.

Big deal made of the fact that the economy has regained all of the jobs lost in the finance-induced recession.

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But, save the high fives …that’s only part of the story.

The rest of the story doesn’t look nearly as rosy.

 

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First, compared to other recessions, it has taken the economy a lot longer to regain the number jobs.

Sure, the recession was deeper, but the recovery was still asymmetrical … i.e. it dragged on a lot longer than the typical bounceback pattern.

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Source: AEI

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The slow recovery has left almost 10 million people still unemployed … that’s 3 million higher than pre-recession levels.

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And, the number of unemployed is understated (by historical standards) since so many people have dropped out of the labor force … i.e. have quit looking for work.

Some are simply discouraged and some, I guess, have simply been “liberated from the burden of work”

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Combining the factors, the employment to population ratio continues to lumber along roughly 4 percentage points lower than pre-recession levels.

Translation: we’ve settled in at a new normal rate of workers supporting the full population … and the jobs being added are just keeping up with population growth.

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While the number of jobs has built back up to pre-recession levels, the average number of hours worked is still down by about 1% … that equates to about 1 million “equivalent time” jobs.

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The decline in hours worked is driven by the mix shift from full-time to part-time jobs.

While total jobs are back at pre-recession levels, the number of full-time jobs is till almost 3 million short.

Said differently, about 3 million full-time jobs have been replaced by part-time jobs.

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Source: 528

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The average hourly wage rates bumping along at historically low levels … in part due to the mix shift to lower paying part-time jobs … and in part due to industry mix shifts, e.g. more jobs in low paying industries like hospitality.

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Inflation-adjusted “real wages” have been flat-lined for the past 5 years.

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Source: 528

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Bottom line: Good that the economy has bottomed out and has some modest traction … but end zone dances are way premature.

#HomaFiles

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