Don’t Get Too Excited About the New Jobs Report

The eco­nomy hit a mile­stone on Fri­day after the latest jobs re­port shows that the U.S. re­covered all the jobs lost dur­ing the Great Re­ces­sion. But people shouldn’t cel­eb­rate too much just yet.

On Fri­day, the Bur­eau of Labor Stat­ist­ics said the U.S. eco­nomy ad­ded 217,000 jobs in May, with the un­em­ploy­ment rate un­changed at 6.3 per­cent. The eco­nomy needed to add 113,000 to pass the prere­ces­sion peak num­ber of jobs from Janu­ary 2008. The United States lost 8.7 mil­lion jobs in the re­ces­sion. But this over­looks the simple fact that there are more work­ing-age people in the U.S. now than there were six years ago.

Here’s one way of look­ing at that. There were 7.6 mil­lion un­em­ployed people in the U.S. in Janu­ary 2008, and the un­em­ploy­ment rate was 4.9 per­cent. Today, there are 9.8 mil­lion un­em­ployed Amer­ic­ans, well over 2 mil­lion more than be­fore the re­ces­sion, and the un­em­ploy­ment rate is much high­er.

So, while on its face it looks like the U.S. re­gained all the jobs lost over the past six years, that per­spect­ive doesn’t take in­to ac­count the num­ber of new people in the labor force or ad­dress the labor mar­ket gap cre­ated by those new people. Heidi Shi­er­holz of the left-lean­ing Eco­nom­ic Policy In­sti­tute notes that, as of last month, there was a 7.1 mil­lion-job gap from prere­ces­sion levels.

What this jobs re­port does show, though, is that the U.S. is on a pos­it­ive, al­beit slow and steady, trend to­ward eco­nom­ic re­cov­ery. The av­er­age monthly job growth for this year so far, factor­ing in re­vi­sions, is 215,600, com­pared with 194,000 in 2013, 186,000 in 2012, and 174,000 in 2011. This shows that the eco­nomy is gradu­ally adding jobs.

And for some more pos­it­ive news, as eco­nom­ist Justin Wolfers writes for The Up­shot, Fri­day’s job re­port marks the 51st con­sec­ut­ive month of private-sec­tor jobs gains, match­ing an all-time re­cord. The re­cov­ery’s path may be slow, but it is now re­cord-break­ing in its con­sist­ency.

The U.S. eco­nomy, though, still has a long ways to close that em­ploy­ment gap and build up its work­force.