The June 2011 employment report paints a dismal picture of recovery in the labor market two years after the recession was declared officially over. Employers added only 18,000 new jobs in June and the unemployment rate continued to inch upward to 9.2 percent. When one looks at a broader measure of underemployment that includes people working part time who want full time employment and workers who have given up searching for work but would like to work, over 25 million people or 16.2% of the workforce is underemployed.
Pretty much everywhere one looked in this report the news was grim. Employers were not hiring, hourly wages were down, hours of work were down, and temporary employment (usually an indicator of employers’ intentions of hiring permanent employees) fell. Job losses in state and local government continue to grow with layoffs since 2008 of local government employees, many of them teachers, approaching a half a million workers.
While one should not put too much weight on any one month’s employment report, the June report combined with downward revisions to the prior two months employment numbers suggests there is something more going on here than just a temporary blip. There have essentially been no net new jobs added to the economy over the last two months. The economy needs help on the employment front and the need to provide additional fiscal stimulus is clear. It is not a mere coincidence that softening in the employment numbers is happening at the same time that fiscal stimulus is wearing off. Further cutting support from the federal government to state and local governments and unemployed workers will only accelerate the worsening picture in the labor market.
