U.S. Hiring Slows to a Crawl
- Job creation in May was its lowest in more than five years, and numbers for the previous two months were revised down.
- Nearly half a million Americans dropped out of the workforce in the month. Another half a million are new part-time employees who wish they could work more.
- The grim facts came to light just days after President Obama traveled to Indiana to brag about his skills as a job creator.
Job creation under President Obama’s economy came grinding almost to a halt in May. On Friday, the Labor Department reported an increase of only 38,000 jobs in May – the weakest performance since September 2010. The private sector created just 25,000 jobs.
The number was far below the 158,000 new jobs predicted by analysts. It was also much less than the 178,000 monthly average for the first four months of 2016. Employment numbers for March and April were also revised down by 59,000 jobs. Labor Secretary Tom Perez tried to spin the numbers by saying that a strike by Verizon workers reduced the employment figures. The Wall Street Journal noted that roughly 35,000 workers went on strike, and Verizon hired 25,000 temporary workers – so the net impact was only about 10,000 job losses.
Job creation falls off a cliff
The latest bad jobs numbers come on the heels of the administration’s new overtime rules, which may force more employers to cut hours and lay off workers. The numbers also follow a rhetorical push from the Obama administration indicating that it sees no problem with sustained weak economic growth.
Two days before the numbers were released, President Obama traveled to Elkhart, Indiana, to brag about job creation during his administration. He suggested that anyone who is dissatisfied with the tepid economic recovery of the past seven years is pushing a myth. In the president’s weekly address on Saturday, he repeated his claims that job creation during his administration has been strong. It appears that the president is the one telling fairytales.
“The May report is a disaster. … It’s also a sign that President Obama should interrupt his economic victory tour.” – Douglas Holtz-Eakin, 06-03-2016
Labor force participation takes a hit
The administration also reported that half a million Americans dropped out of the workforce in May. The number was so large that it helped push the official unemployment number down to 4.7 percent – a decline of 0.3 percentage points – despite very few new jobs being created in the month. If the labor force participation rate were the same as when President Obama took office, the unemployment rate would be 9.2 percent.
Leaving the job market: Labor force participation rate has plummeted
The participation rate now sits at 62.6 percent – near its lowest level since the Carter administration. Since October 2013, the participation rate has largely been stuck in a narrow range of 62.4 to 63.0 percent. Prior to the recession, the rate was 66 percent. The persistently low labor force participation rate shows that millions of Americans are staying on the sidelines.
In addition to a decline in the labor force participation rate, the number of people working part time but wanting full time employment increased by 468,000 in May.
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