On the surface, recent jobs numbers represent solid economic growth, yet polls show that Americans continue to worry about economic conditions.
Further analysis helps explain this disconnect.
While the headline jobs numbers are strong, many other economic indicators have not fully recovered.
The Bureau of Labor Statistics report showed that employers added 215,000 jobs while the unemployment rate remained constant at 5.3 percent. However, finding work remains difficult for those who do lose their jobs or re-enter the labor market.
Many potential workers have gone on disability insurance and will never return to the labor market.
In a stronger recovery, they would have had jobs instead.
The overall unemployment rate has dropped sharply over the past two years.
The average duration of unemployment in June stood at 28 weeks—over six months. While down from the worst days of the recession, that is still nearly double the average length of time workers spent unemployed in the two decades before the recession hit (16 weeks).
It is also two-fifths higher than the previous pre-recession all-time high (20 weeks in January 1984). Finding a new job is still much more difficult than before the financial crisis.
Many new hires probably accepted sub-optimal jobs because they saw few better opportunities.
Other data confirms this. Firms’ recruiting intensity remains low, and the average length of time it takes companies to fill new jobs has hit record highs. Businesses do not appear to be filling jobs with much urgency.
Additionally, millions of Americans have left the labor force and not returned. The aging (and retirement) of the baby boomers explains only part of this.
In June, the labor force participation rate of 25- to 54-year-olds dropped to 80.7 percent—its second-lowest level in 30 years.
While the economy has improved somewhat over the past two years, job opportunities have not returned to pre-recession levels. Hopefully that will soon change.
But for now, job growth and low unemployment do not tell the full story of the depressed labor market.