The Labor Market Has Stalled Again

by Rea Hederman

The new May jobs report makes it two straight months of bad news on the labor front. Troubling signs include a contraction in temporary help services, downward revisions in previous jobs reports, contractions in manufacturing, flat working hours, and the fact that both labor-market surveys are showing a tepid labor market. The unemployment rate climbed as job creation failed to keep pace with the normal increase in the labor force. Not only is the labor market not making up ground lost during the previous recession, but now it’s not even keeping up, with only 83,000 new private-sector jobs.

The long-term unemployed (27 weeks or more of unemployment) account for almost half of all unemployed workers, and very few of the long-term unemployed are finding work. The median duration of unemployment climbed back to its highest level in six months. The unemployed workers who are finding jobs are most likely ones that have been unemployed for only a few weeks.

Leading indicators of the labor market, such as the demand for temporary help or the average numbers of hours worked per week, are either flat or in decline. This makes it doubtful that there will be a sharp rebound and upswing in the labor market in the next month. The labor market is stalling out again.

This report is in line with much of the news of the last month, which showed a weakening, almost flat, but still slightly expanding economy. The labor market is nowhere close to where it should be at this stage of a recovery. Last year, the spring jobs reports provoked the laughable “recovery summer” comments from the administration. We can only hope for a return to the better job reports of the first quarter of 2011, instead of a return to a flat labor market.

Rea Hederman is assistant director of the Center for Data Analysis at the Heritage Foundation.

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