The May unemployment rate dropped to its lowest in nine years, even though net job growth was among the weakest in six years.
According to the most recent monthly report from the Bureau of Labor Statistics (BLS), the private sector netted a mere 25,000 nonfarm job gains in May. Local, state and federal governments gained 13,000 jobs, resulting in 38,000 total net job gains. That was the worst job growth since 2010, when the economy was still crawling back from the Great Recession.
Some of the dismal jobs report was caused by 36,000 Verizon workers going out on strike for 6 weeks. Another reason is that the unemployment rate has been in the normal range (around 5.0 percent) since about last October, so economists expect hiring to slow somewhat. But most of it was simply because employers didn’t hire much or they laid off workers. Economists had expected around 160,000 total net job gains, according to various sources.
As if May job gains weren’t dismal enough, the BLS revised job gains for March and April 2016 showing that the economy netted 59,000 fewer jobs than the BLS had previously estimated. After that revision, job gains have averaged only 116,000 per month in the past three months.
The unemployment rate dropped to 4.7 percent in May, after remaining steady at 5.0 percent in March and April. That’s the lowest rate since September through November 2007, when it was also 4.7 percent.
The private sector has now gained nonfarm jobs (however meager last month) for 75 consecutive months since the Great Recession. The unemployment rate has dropped 5.3 percentage points from the recessionary high of 10.0 set in October 2009. (More information about the unemployment rate is below.)
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At 46,000, job growth continued in health care as it has for years. The industry has added 487,000 jobs in the past year alone. Much of the industry’s steady job growth over the past few years, even throughout the Great Recession, is attributable to the increasing medical demands of aging baby boomers and the ever-growing obesity epidemic, and to provisions in the Affordable Care Act (“Obamacare”) as well.
Employment in other major industries, including wholesale trade, retail trade, transportation and warehousing, financial activities, and leisure and hospitality changed little in May.
Construction, one the measures of labor-market health, lost 15,000 jobs. Manufacturing, also a measure of labor-market health, lost 10,000 jobs after few gains throughout 2015 and this year so far.
The mining industry continued losing jobs in May (-10,000), again due mostly to lower oil prices. The industry has lost 207,000 jobs since reaching a job-growth peak in September 2014. Most of the job losses are in mining support operations. (See Table B by the BLS for more job numbers listed by industry.)
Among the major work groups tracked by the BLS, teenagers again suffered the highest unemployment rate (16.0 percent) followed by Blacks (8.2), Hispanics (5.6), adult men (4.3), adult women (4.2), Whites (4.1) and Asians (4.1, not seasonally adjusted). The unemployment rate for adult men, adult women, Whites and Hispanics declined in May. No other group experienced a significant change.
Workers who are 25 years of age or older and who have earned four-year college degrees or higher experienced a 2.4 percent unemployment rate in May, the same as in April. Those in the same age group and who don’t have high school diplomas suffered a much-higher 7.1 percent rate, down from 7.5 in April. (See Table A-5 by the BLS for more information about the unemployment rate by education level.)
The unemployment rate dropped 0.3 to 4.7 percent in May, even though net job growth was lackluster. That’s because more unemployed workers gave up looking for jobs before the count.
In order for the BLS to count workers as unemployed, they must have been actively seeking jobs in the four weeks preceding the count. The number of workers that the BLS counted as unemployed in May was 7.4 million, down by 484,000 from the month before.
The count of unemployed workers does not include those who are involuntarily working only part time and with fewer benefits, if any, such as no health insurance, because they can’t find full-time jobs or employers cut their work hours. The number of involuntarily part-timers in May was 6.4 million, up by 468,000 from April.
The average workweek for all part-timers and full-timers in the private sector was unchanged from April at 34.5 hours. Their average hourly earnings increased by 5 cents to $25.59, after increasing by 9 cents in April. Average hourly earnings have risen by 2.5 percent in a year. For private-sector production and nonsupervisory employees, average hourly earnings increased by 3 cents to $21.49, after a 5-cent hourly increase in April.
The unemployment rate also does not include “marginally-attached” unemployed workers. The BLS does not count them in the official rate because they stopped looking for work in the four weeks preceding the count, for reasons such as school attendance, family matters or their collective perception that there simply are no jobs — at least not for them.
The number of marginally-attached workers in May was 1.7 million, the same as in April. Among the marginally-attached, 538,000 were so-called “discouraged workers” because they gave up looking for work due to their shared perception that there are no jobs. (The BLS does not seasonally adjust any of the figures in this paragraph.)
The number of long-term unemployed workers, those who have been without jobs for 27 weeks or longer, was 1.9 million in May, down by 178,000 from April. These workers accounted for 25.1 percent of the unemployed. Standard state unemployment benefits last only up to 26 weeks without extensions.
If you are a recent victim of job loss or a reduction in work hours resulting from the high unemployment rate, then you might be eligible to collect full or partial unemployment benefits from the state unemployment office. You might also be eligible to continue your employer-provided group health insurance coverage through COBRA.
For more details about the May 2016 unemployment rate and job numbers, see the “Employment Situation Summary” by the BLS. The BLS plans to report the June 2016 unemployment rate and job numbers on July 8. To receive notification like the above automatically, subscribe to Employee Rights Blog for free.
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Except where otherwise noted, figures in this unemployment rate report were rounded and/or seasonally adjusted by the BLS, and are subject to revision by same (based on additional data that was not initially available). The unemployment rate chart pictured above was provided by the BLS.