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June Jobs Report: Beware Underemployment and Underground Economy

According to the June jobs report, the economy added 195,000 jobs last month, on par with the revised pace in May. Economists were looking for 165,000, and a dip in unemployment to 7.5%.

Despite the gains, the unemployment rate remained at 7.6% because more people hit the pavement looking for jobs–making it all the more difficult for job seekers.

Paychecks grew at a modest pace and have managed to beat (government-reported) inflation in the past year. Average hourly pay increased $0.10 to $24.01, up 2.2% from a year ago. Meanwhile, over the 12 months ending in May, consumer prices ticked higher by just 1.4%.

Leisure and hospitality (up 75,000) posted the strongest gains in June compared to recent months. But it is worth noting jobs in this sector tend to pay less than other industries.

In addition to the increase in low-paying jobs, here are seven things to consider when you evaluate how good the June jobs report really is:

  • The economy has created roughly 182,000 jobs a month over the last year, a stride that barely keeps in-step with the rising population. It's also well off the 250,000 jobs a month created during the hearty mid-1990s.
  • The employment-population ratio, the percentage of adult Americans who hold a job, has barely budged in the past three years. According to the U.S. Bureau of Labor Statistics, about 58.6% of the civilian population over the age of 16 holds a job, a rate that has remained constant since 2009. The last time it was this low was 1983.
  • The underemployment rate–a broader measure of joblessness that included people who stopped looking for work and part-time workers who prefer full-time jobs– as well as unemployed, climbed to 14.3% from 13.8%. The number of "involuntary part-timers" jumped by 322,000 to 8.2 million.

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