June Employment Report
The Bureau of Labor Statistics reports:
Nonfarm payroll employment rose by 121,000 in June, and the unemployment rate was unchanged at 4.6 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to trend upward in several service-providing industries and in mining. Average hourly earnings rose by 8 cents in June.
The unemployment rate was unchanged even though the employment to population ratio increased from 63% to 63.1% as the labor force participation rate increased from 66.1% to 66.2%. It seems the reported employment increase for the Household Survey was 387 thousand.
Employment for the construction and retail trade sectors actually declined as the other sectors reported modest increases in employment.
Update: Chris Isidore reports on the reactions of a few economists who share the concern about an allegedly strong labor market coming from the Federal Reserve:
The wage gain also represents a 3.9 percent year-over-year rise, the biggest gain in that measure since June 2001. That could be seen as being inflationary, and could prompt the Federal Reserve to keep raising interest rates in an effort to cool the economy and keep prices in check.
I want to simply scream that this is absolutely absurd, but let me turn the microphone over to Kevin Drum:
inflation over the past 12 months has clocked in at about 4.1%, so a 3.9% rise in nominal wages is a decrease in real wages. This is the “wage spike” the Fed is supposed to be concerned about. Riddle me this: if the Fed tries to put the brakes on wages every time they creep up from negative to zero, what will hourly wages look like over the long term? Answer: consistently down. Which is exactly what they’ve looked like over the past several decades. The overall economy is doing fine. Growth is strong, productivity is strong, corporate profits are strong, CEO compensation is stratospheric. There’s plenty of new wealth being created. The problem is that financial markets and the Federal Reserve are bound and determined to make sure that none of this new wealth makes its way into the hands of the middle class. That’s why, in our looking-glass world, a real wage decline of -0.2% is described as an increase.
Update II: KLo over at The Corner (NRO) beat this West Coast bear to reporting the June employment news as she cited a summary from the JEC, which included as its last bullet point:
Average hourly earnings increased by 8 cents in June and have risen over the past year by 3.9 percent.
So as Kevin Drum noted, nominal wages rose by less than the increase in prices, which means real wages declined. I guess it was too early for either the JEC or KLo to check this out.
Update III: ThinkProgress puts its all in perspective:
The White House issued a fact sheet today on President Bush’s economic record. The headline blares “5.4 Million Jobs Created Since August 2003”. The sheet suggests recent job growth proves President Bush’s economic strategy is a smashing success.
Let’s set aside for a moment that the “fact sheet” conveniently ignores the 22 months of jobs losses that proceeded August 2003. Instead, let’s put Bush’s job record since August 2003 in perspective:
1. Monthly job growth since August 2003 is 50% lower than the average of President Clinton’s entire term. Since August 2003, job growth has averaged 160,000 per month. During Clinton’s eight years in office job growth averaged 236,000 per month.
2. Real wages have fallen since August 2003. The average worker’s real wages were twenty cents lower in June 2006 than they were in August 2003.
Any way you slice it, Bush’s economic policy has resulted in slower job growth and lower wages. That’s nothing to brag about.