Woohoo! The unemployment rate dipped from 5 percent in April to 4.7 percent in May. Unemployment under 5 percent! This is the lowest unemployment rate since 2007. Get excited!
Actually… wait… hold the confetti.
This latest jobs report is NOT good news. The main reason the unemployment rate went down was not because more workers found work. In fact, only about 38,000 jobs were created in May. The main reason the unemployment rate went down is because more Americans gave up looking for work and left the labor force. The labor force participation rate went down 0.2 percent to 62.6 percent, similar to rates in 1977.
Unfortunately economic data can fall prey to political spin, on both sides of the aisle. Democrats and those supportive of the current Administration may be tempted to see this jobs report with rose-colored glasses. Republicans may say this report means doomsday.
To be fair, the 2.5 percent wage growth in the report is not bad. It's true, things could always be worse! But to sustain wage growth, we really need economic growth and job creation, which clearly we are not seeing. Another notable bit of bad news in the report is the number of involuntary part-time workers, which increased by 468,000 (nearly half a million people!) to 6.4 million in May. These are folks who'd like to work a full-time job, but can't find one, so have settled for part-time work.
This jobs report is pretty dismal. And while it may seem like just numbers on a page, for millions of Americans, this is personal. To be out of work is a great financial hardship. Our fellow Americans deserve better than the misguided economic policies that have held back our economy for too long.