Unemployment in the United States fell in June to 6.1 percent from 6.3 percent in May, the lowest rate since the fall of 2008. That’s when financial giant Lehman Brothers collapsed, taking with it in house-of-cards fashion other Wall Street firms and a good chunk of the auto industry, along with a lot of other luckless companies.
That prompted an unprecedented government bailout that pumped billions of dollars into banks and businesses and continues even to this day, in much-diminished form, through the Federal Reserve’s bond buying program. Now, thanks to the robust economic recovery, that program may be nearing its end.
The economy added 288,000 jobs last month and 2.5 million jobs in the last 12, the fastest annual growth since 2006. According to The Associated Press, the 200,000-plus monthly job gains over the past five months have been the best stretch since the 1990s tech boom — although we must hope this growth comes to a better ending than the subsequent tech bust.
Job gains were spread across the economy — factories, retailers, financial firms, restaurants and bars all added substantially to their payrolls. And employment got a boost from another surprising quarter — government hiring, which began to tail off in 2007 and began shedding employees every year from 2009 to 2013. Public-sector hiring has increased by 54,000 jobs so far this year, good news for hollowed-out local and state governments.
The first-quarter 2.9 percent decline in gross domestic product is increasingly looking like a weather-related anomaly. Economists polled by the British newspaper The Guardian seemed to agree that the world’s largest economy is in good shape with strong underlying momentum.
There are two other anomalies that are perhaps cause for worry. Wage growth has remained at an anemic 2 percent a year during the recovery, well below the historical average of 3.5 percent. The U.S. economy depends heavily on consumer spending and 2 percent a year is not going to do much to help that. Some think wages will pick up along with the economy, a view that seems to have not yet caught on with employers.
The other anomaly is that workforce participation — the number of Americans working or actively looking for work — is stuck at a low of just over 62 percent. The problem is no longer purely economic; the jobs are there, and employers are hiring. It might be structural: workers stuck in the wrong place or with the wrong skills. Or it could be societal: Older workers who lost their jobs and are content to scrape along until retirement age and Social Security or desperate workers who are willing to work off the books.
A booming economy solves all kinds of problems and ultimately these may be two of them.