ANALYSIS | The May jobs report came in a little more underwhelming than one might have expected. Economists hoped for at least 150,000 jobs created and at least a repeat of the 8.1 percent unemployment. Instead, the economy could only generate just under 70,000 jobs. The unemployment rate inched up to 8.2.
Naturally, it took nanoseconds for the anemic numbers to spill over into the political arena. Mitt Romney pounced on the numbers as evidence of a stalled recovery. Perhaps he's right. Maybe we are headed for a double-dip recession.
But there are several factors to consider that aren't being covered in the May jobs report.
1) We've been hearing an inconsistent critique. Critics think we've never recovered in the first place. It seems rather odd that we have an economy that never recovered and a double-dip recession, unless the economy has recovered somewhat. Remember that growth rates and jobs are different variables. Traditionally, one (growth) outpaces the other (employment).
2) More folks are actually looking for work. Such data doesn't measure jobs lost so much as individuals filing for unemployment benefits. And to receive those, you typically have to show some evidence of having looked for a job. As the economy improves, folks who have given up searching are getting back into the jobs game. That's the best explanation for why the unemployment numbers nosed up, especially with jobs still being created.
3) Long-term, jobs will outpace job seekers. Members of our faculty have been trading emails back and forth about the long-term economic trends. Some are highly pessimistic, taking the tone that "those jobs are gone and will never return."
But the issue is as much demographic as economic. Those baby boomers are going to be retiring over the next decade or so, and subsequent generations include far fewer workers, according to respected Northeastern University economist Barry Bluestone. Additionally, businesses are looking to expand, and they need skilled workers to meet the huge demand. That comes from Conor Sen, Risk Analyst with Partner Fund Management.
Some places have already begun to experience this, like in the West such as North Dakota, as well as cities in recovery mode, like Detroit. In fact, this job demographic boom might have hit sooner, as places ranging from Oklahoma and Illinois were already experiencing this factor before the Great Recession hit. But while tomorrow's numbers would make anyone downright giddy, it is important to note that this jobs glut will be the result of a huge number of retirees that will depend upon those workers. Also, if the United States can't provide those educated workers with skills, those businesses will go to a labor market that can. That would make us worse off than today!
America is at a crossroads. Are we going to look at the European model of pessimism, in-fighting, cutting back, and hunkering down? Or are we going to be more like the Asian model of expansion and focusing on developing education to keep pace with that growth? Whoever gets elected, I hope, will keep these three factors in mind.