Issue of the week: The jobs report’s red flags
“The U.S. labor market has lost some of its mojo,” said Sho Chandra and Patricia Laya in Bloomberg.com. May’s jobs report was weaker than expected, the Labor Department revealed last week, with the economy adding just 138,000 jobs, well below what analysts had forecast. And while the unemployment rate fell to a 16-year low of 4.3 percent, it was partly because nearly 430,000 people stopped looking for work. The economy is now on pace to add an average of 162,000 jobs a month this year, down from the 2016 average pace of 187,000. “It’s too soon to worry, but not too soon to start paying attention,” said Ben Casselman in FiveThirtyEight.com. May was the economy’s 80th straight month of job gains, the longest streak on record. But that doesn’t mean we can ignore a drop in the labor force when an improving economy should theoretically be luring Americans back to work, or the fact that retailers have now cut jobs four months in a row. The economy is still growing, but it “may be starting to flash some warning signs.”
“One negative reading does not constitute a trend,” said Ana Swanson in The Washington Post. But the numbers do raise serious questions “about just how long the economy’s current expansion will run.” The latest figures fall well short of the kind of growth the White House needs to meet its ambitious goal of adding 10 million jobs in President Trump’s first term, or to pay for an aggressive program of tax cuts. Enthusiasm for Trump’s agenda has pushed stock markets to all-time highs, but if the economy stumbles further, that optimism will be severely tested.
Even more worrisome for Trump: The economy isn’t getting better for his “forgotten” Americans, said Alexia Fernández Campbell in Vox.com. Working-class men who have dropped out of the labor force, “frustrated with the lack of wellpaying jobs,” voted in droves for Trump last November. But so far, they aren’t looking for work. The share of workers ages 25 to 54 participating in the labor force actually dropped from 81.7 percent to 81.5 percent in May, down from 83 percent a decade ago. This shows that “Americans are still more disengaged from the labor force than they were before the recession.”
There’s another reason our below-average unemployment rate “is still producing an above-average level of economic anxiety,” said Patricia Cohen in The New York Times. Even workers with jobs are finding it harder to earn a predictable paycheck. Recent data show that the hours Americans work can swing wildly from week to week, especially for low- and moderate-income households. Some 41 percent of all hourly workers “are not given more than a week’s notice of their schedule; nearly half have little or no say on their work hours.” For some families, income can vary as much as 70 percent from one month to the next—a volatility that can plunge family finances into chaos. Expenses are just as unpredictable, with “one uh-oh expense—usually in the form of a medical, tax, or car repair bill—” wrecking a family’s balance sheet for a year or more. The traditional American economic narrative used to be “steady financial progress over a lifetime.” For many people, that progress has been replaced by ongoing turbulence.