Before you start dancing in euphoria because the unemployment rate fell to its lowest level in five years, let’s take a closer look at the recently released Bureau of Labor Statistics (BLS) jobs numbers and focus on three major trends.
First, the pace of jobs growth remains way too fragile. Employers did add 203,000 and 204,000 respectively in the last two months. However, remember that this recent recession killed off 7,900,000 jobs. Therefore, even at this pace (i.e. about 200,000 jobs per month), it would take over 39 months or almost 3 ½ years before the jobs market returned to pre-recession levels! Furthermore, it is not clear that this pace can be sustained. For example, look no further than this summer for a string of disappointing jobs reports!
Second, even though the sum of a) unemployed (10,900,000) + b) underemployed (7,700,000 Americans who are involuntarily working part-time when they really desire a full-time job) + c) the 2,100,000 who just gave up looking and are not counted by the BLS numbers = actually fell by a combined 1,000,000 and was the largest cumulative decline in a long time, it still adds up to 20,700,000 U.S. citizens who are either unemployed, underemployed or just gave up looking. That is almost 15% of the working population or 1 in 6 people you meet on the streets of Illinois, Michigan, Indiana, Michigan or whatever state you live!
Finally, it is not just quantity, but quality that counts in jobs creation. Nearly one-third of the newly created jobs were in low wage sectors including retailing, hotels, restaurants and temporary-help agencies. They were not produced from the scientific, engineering or technical recruiting areas that I cover including plant managers, directors of engineering, mechanical engineers, design engineers, CAD drafters, process engineers, quality engineers, material scientists, chemists, polymer scientists and engineers, product developers, electrical engineers, software engineers or IT professionals. That may explain why wage and salary income rose a paltry $8.9 billion in October according to a separate Commerce Department report released last Friday.