June Unemployment Report: Rate Unchanged at 7.6%

 Signs of a recovery, but a long way to go

Josh Elliott-Traficante

The June unemployment rate remained unchanged at 7.6%. While the ranks of the unemployed grew by 17,000, the increase was not large enough to change the rate. The number of those not in the workforce grew by 12,000, but those classified as wanting a job fell by 132,000.

The critical labor force participation rate increased by one tenth of a point to 63.5%, marking three straight months of improvement. While this rate, a reflection of the large numbers of people who have left the workforce due to the recession, is still at 30 year lows, incremental increases are an encouraging sign.

At the same time however, the unemployment rates that capture some of those discouraged workers who gave up looking for work increased. The U-5 rate increased from 8.0% to 8.2%, the U-5 from 8.8% to 9.1% and the U-6 from 13.8% to 14.3%.

Another discouraging sign was the drop in the number of full time works with a corresponding spike in full time workers. The number of full time employees fell by 240,000, while the number of part time workers grew by 360,000. Part time employment has been surging since March of this year, while full time employment was also growing (at least until June), albeit at a much slower rate.

The reasons for the growth in part time employment over full time employment have been attributed to both a fear on the part of employers over the strength of the recovery and the reluctance to hire full time employees due to the extra costs incurred from the Affordable Care Act or Obamacare.

Turning to the Establishment Survey Data, 195,000 non-farm jobs were added. Sectors seeing the largest gains were Construction (+13,000), Retail Trade (+37,100) and Food Services (+51,700). Seeing the biggest losses were Manufacturing (-6,000) [although automobile manufacturing was +5,000], Government (-7,000), and Transportation and Warehousing (-5,000).

The Establishment Survey Data reflects the surge in part time workers mentioned above. The areas of biggest growth, Retail Trade and Food Services, are sectors where the vast majority of the jobs are part time, entry level positions, not full time jobs.