Nationally, job quality and wage growth continue to lag during recovery

AS noted yesterday, the BLS released the jobs report for September showing that the economy added 248,000 jobs while the unemployment rate (UER) dropped to a 6 year low of 5.9%.

So that’s the good news–the economy continues to add jobs and is above pre-recession levels:

Moreover, 2014 has shaped up to be (thus far) the best year for job growth with 7 months of 200,000 jobs added:

However, while the jobs report was good news it that it was another month of solid job growth, there are still several lingering problems in the market.

For starters, the labor force participation rate (LFPR) continues to decline, down 0.1 percentage points (pp) from a month ago, down 0.5 pp from a year ago, and down 3.3 pp from the start of the recession in December, 2007. Meanwhile the employment population rate (EPR) has not budged the past four months, is up 0.4 pp from a year ago, but down 3.7 pp from the start of the recession:

And should anyone claim that the above graph is skewed by boomers leaving the labor market, here are the LFPR and EPR from prime age workers, indicating the cyclical weaknesses in the labor market:

Further, both long-term unemployment (LTU) and part-time work for economic reasons (PTER) have declined from the their recession highs, they are still quite high relative to pre-recession levels:

Under-utilization continues to hamper the U.S. economy, with the broader U-6 rate not declining at the same rate as the generally used U-3:

It’s important to note that the U-6, despite its broad measure, excludes those people who are so discouraged about job prospects that they have not actively searched for a job in the prior 12 months (though that group accounts for less than 2% of the total civilian population):

Further, wage growth continues its tepid pace:


Low wage growth and poor job quality continue to hamper the outlook of the recovery.  For instance, yesterday’s jobs report showed that while the economy continues to add jobs, those jobs are in the lower paying industries such as retail trade and leisure and hospitality, while construction and manufacturing continue to lag:

In short; yes the economy is adding jobs, but wages and job quality continue to lag.

John Haskell

About John Haskell

John graduated from the University of Southern Maine with a degree in Political Science, and from the University of Maine School of Law. He has worked in both the public and private sectors, and currently, works with a small business services company in the Mid-Coast area.