Has America’s economy finally “turned a corner”? It’s a question that’s been asked countless times since the Great Recession formally ended in June 2009, and now it’s being asked again. Last week the Commerce Department upgraded its estimate of second-quarter GDP growth from 4 percent to 4.2 percent, and it also reported that durable-goods orders had soared by 22.6 percent during the month of July.
While the Commerce data are indeed encouraging, here’s a sobering reminder of where things stand in the U.S. labor market:
(1) Wage growth remains stagnant. “ Five years of economic expansion have done almost nothing to boost paychecks for typical American workers while the rich have gotten richer,” write Bloomberg correspondents Aki Ito, Ian Katz, and Ilan Kolet. “Meager improvements since 2009 have barely kept up with a similarly tepid pace of inflation, raising the real value of compensation per hour by only 0.5 percent. That marks the weakest growth since World War II, with increases averaging 9.2 percent at a similar point in past expansions, according to Bureau of Labor Statistics data compiled by Bloomberg.”
(2) Wage stagnation is a problem even for those who have completed some type of higher education. According to San Francisco Fed economists Bart Hobijn and Leila Bengali: “Starting wages of recent college graduates have essentially been flat since the onset of the Great Recession in 2007. ”
(3) The average duration of unemployment remains staggeringly long: As of July, it was 32.4 weeks. That’s down from a post-recession high of 40.7 weeks in December 2011, but still way above the respective peaks following the 1981–82 recession (21.2 weeks, in July 1983), the 1990–91 recession (19.5 weeks, in May 1994), and the 2001 recession (20.5 weeks, in June 2004). “The historic average is 17 weeks,” notes Nellie Huang of Kiplinger’s Personal Finance.
(4) The U-6 unemployment rate — which measures the share of workers who are unemployed, working part time for economic reasons, or “marginally attached” to the labor force (this last group includes “discouraged” workers) — was higher in July (12.2 percent) than it was at any point between January 1994 (when the Bureau of Labor Statistics first started publishing U-6 data) and October 2008.
(5) The overall labor-force-participation rate (LFPR) for July was below 63 percent. Before October 2013, it had not been that low since the late 1970s (when the female participation rate was much lower than it is today).
(6) The LFPR among men aged 25 to 54 was lower in July (88.1 percent) than it was at any point in recorded history prior to October 2013 (when it hit an all-time low of 87.9 percent).