August 7, 2014– Does Low Unemployment signal the end of the Recession? July’s Unemployment Report, released by the Department of Labor earlier today, indicates growth in many major hiring sectors of the economy. For the sixth straight month hiring increased and the unemployment rate decreased. Is this trend an indication that the painful financial times are over and that a robust economy is right around the corner? Perhaps; however, there are certain disturbing trends in the employment data which may make a celebration premature.
One of those negative trends is that the number of part time workers who are employed, yet would desire more work hours, held steady at, a staggering, 7.5 million Americans. This number is an indicator that employers are still very gun shy about hiring full time workers, or converting part time employees to full time status, where they may earn, much needed benefits and overtime pay. In recent years this segment has given rise to the popularity of the term, “underemployed“.
Another negative indicator in the economy is that the number of people who have been unemployed for a period of more than six months is a record 3.5 million workers. With the possibility that a large segment of the chronically unemployed population, whose unemployment benefits have, effectively, aged out, are not even considered in these numbers, the true unemployment numbers could be significantly higher than what the government statistics report. This is one factor that is rarely spoken about in the midst of discussions of decreasing unemployment benefits claims.
Another factor to consider is that the labor force participation rate, or the volume of eligible workers in the employment pool, has remained remarkably stable. Often in a growing economy, the unemployment rate is artificially inflated slightly by increasing numbers in this area, offsetting any gains in jobs. In the current environment no such factors exist to bolster claims that the the true unemployment rate is actually lower than is reported.
In conclusion, there are strong indications that there is a slow trend towards an improving economy; however, it may be awhile before a declaration of a full scale recovery may be warranted. All too many unemployed and, underemployed, Americans can attest to this fact. Until the economy elevates the real wages of existing employees, and, until, the army of part time workers obtains full time status, with employee benefits, there is still a lot of room for economic improvement.