By Rachael Levy
The loud cheers that greeted the news Friday of a sudden surge in new jobs and a significant drop in unemployment overlooked a deeper malaise within the economy.
The litany of ills includes flat wages, a still-too-high unemployment rate and declining labor force participation, as well as low GDP and inflation growth.
The economy added 288,000 jobs across sectors in April, the fastest rate in more than two years, up from 192,000 the previous month, the Labor Department reported Friday.
Jobs grew across the wage spectrum, in retail, food, construction and business and professional services.
In addition, some 36,000 more jobs were actually added in February and March, according to the Labor Department’s revisions, suggesting the economy was stronger than expected in the first quarter.
Meantime, the unemployment rate fell 0.4 points to 6.3 percent, its lowest level since September 2008.
But unemployment dropped because the civilian labor force, now standing at 62.8 percent of the population, lost 806,000 people last month, matching a 35-year low.
These missing workers are not counted in unemployment data, but if they were, the unemployment rate would be 9.9 percent, according to the left-leaning Economic Policy Institute.
As it stands, the 6.3 percent unemployment rate is still well above the 4 to 5 percent average before the recession, and continues to affect Americans at all education levels.
Rachel Pincus, 22, graduated from Wesleyan University last May with a degree in English but has only been able to find unpaid internships in media, her intended career path. About half of her fellow graduates across majors were either underemployed or working unpaid internships, she said.
“It’s disturbing how normalized it is to be doing unpaid work after graduation,” said Pincus, who completed four unpaid internships during college.
Pincus has been living with her parents in Manhattan and applying to paid jobs across the country, with no luck.
“I want to get a job so I can start my life, so I can get out of my parents’ house,” she said. “But I can’t.”
Labor force participation, on the wane since the early 2000s, has been dropping at a precipitous clip since the recession as discouraged workers quit looking for jobs, Baby Boomers retire and young people pursue more education.
For April, not enough discouraged workers and new entrants, such as young people, joined the labor market, the Labor Department said.
“We’re not seeing Americans looking at the economy and saying things are looking better,” said Lindsey Piegza, chief economist at Sterne Agee. “Clearly the underlying assessment for the average person is still very grim.”
Nearly five years after the end of the Great Recession, the total number of private sector jobs finally returned in March to the same level before the downturn began in early 2008. But private jobs are still far below where they would be if the labor market’s trajectory hadn’t been interrupted. Government jobs remain well short of their high point.
Even with the latest uptick, only about 200,000 jobs have been added per month since 2010. The latest increase, 70,000 higher than Bloomberg economists predicted, could be a rebound from recent months of lousy weather — when employers may have hesitated to hire — rather than healthy structural growth.
Meantime, the current rate of job creation remains lackluster. At the current pace, it would take until the end of the decade to return to the level of robustness of the mid-2000s and 1990s.
“There really has been zero recovery in jobs and the broader economy,” said Lee Ohanian, an economics professor at UCLA. “It’s simply not enough to restore the jobs that were lost in 2008 and 2009.”
“There is a long-term picture that is not a pretty one,” Ohanian later added in an email. “We have been losing jobs (as a ratio of the adult population) for more than 15 years. We now have an employment/population ratio that is the lowest since the 1970s.”
Meantime, inflation-adjusted wages have stayed flat since at least 2006. Wages in April stayed the same as in March, signaling a weak labor market.
“Employers are still looking for very flexible, low-cost labor,” Piegza said. “Temporary and low cost are becoming long-term trends.”
High unemployment is also contributing to weak wage and inflation growth. Employers, who have a wide swath of applicants, do not need to hike wages to attract good employees. And as wages stagnate, retailers cannot increase prices because consumers won’t be able to afford the products.
Unemployment in April clocked in at 6.3 percent, and about 35 percent of those people were long-term unemployed, or looking for jobs for more than 27 weeks. Long-term unemployment remains more than twice as high as it was in 2008, stifling domestic growth.
With an overabundant supply of workers, employers have little incentive to increase wages.
Rafaela Rivera, 35, of the Bronx lost her job as a home health care aide last fall and is considered one of the long-term unemployed. She has been supporting her two children and husband, who is disabled, using food stamps and unemployment benefits, which end in June, she said.
Rivera has received some job offers in Queens, a two-hour trip from her apartment in the north Bronx. But the low wages wouldn’t be worth the trek, she said.
“I don’t have the funds for the metrocard,” she said.
Democrats have been pushing measures like an increase to the minimum wage and extended unemployment benefits to boost the economy.
“We still have way too many people who are suffering,” Labor Secretary Ted Perez said Friday.
But those measures do not appear likely to pass anytime soon. Senate Republicans blocked on Wednesday a Democratic proposal to raise the federal minimum wage to $10.10 an hour from $7.25.