Scenes from the employment report

by New Deal democrat

Scenes from the employment report

As I described in my detailed post on the April jobs report, below, almost everything moved in the right direction, and significantly so.  Let me lay out a few graphs to show the longer-term stronger and weaker points.

In the good news department, the U6 underemployment rate has been falling at a good clip in the last few months, and at 8.6%, is about 0.6% from representing a reasonably “full” employment situation:


Part of the U6 calculation is those employed part time for economic reasons.  This isn’t down to normal yet, but continues to make good progress:

What is particularly good news is that both the U3 and U6 un- and under-employment rates are falling, even though people in the prime working age demographic are coming off the sidelines in substantial numbers:

The only other times in the last 30 years there has been a 1%+ increase in prime age labor force participation (red line above) were 1988 and 1995.
This *relatively* stout increase in participation is probably an important reason why nominal YoY wage gains for nonsupervisory workers have stalled:

Finally, we still have about 1 million or more people who aren’t even bothering to look for work, but would like a job now:

This equates to roughly 0.7% of the prime age population.

In sum, we still need to move this +0.7% off the sidelines and into actual employment, and also add another +0.6% or so from underemployment to complete employment before we can say that the the economy is operating at “full employment.” And we are almost 8 years out from the beginning of this expansion, and probably a lot closer to the beginning of the next downturn.  This is simply not an economy that in secular terms is working for the average American.

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