Full employment isn’t what it used to be.
The U.S. Department of Labor reported that 160,000 new jobs were created in April, and the nation’s unemployment rate remained at just 5 percent of the labor force.
Policy makers see 100,000 or more new jobs each month as enough for all new workers entering the labor market and a 5 percent unemployment rate as normal. In a speech last month, Federal Reserve Chairwoman Janet Yellen said the Fed is “coming close to our assigned congressional goal of maximum employment.”
If everyone that should be working is, why is the economy not growing faster?
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The answer is in the details.
Each month the Labor Department conducts two surveys of employment conditions, the establishment survey and the household survey. The establishment survey records total employment, hours worked, and employee earnings from the payroll records of a 140,000 nonagricultural businesses. The unemployment rate is calculated from a survey of just 60,000 households but includes many workers not found in the establishment survey, such as agricultural workers and the self-employed.
The most recent establishment report says production and nonsupervisory workers are averaging less than 34 hours per week, compared with 36 hours in the early 1980s and nearly 38 hours in the 1960s. Perhaps this is by choice, but many regular workers are simply not on the job as often as they used to be.
The household report also shows that many people aren’t working as much as they wish. There are currently 6 million U.S. workers employed part time for economic reasons. The Labor Department says, “These individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job.”
Idaho’s employment statistics tell a similar story. The state’s labor force has grown by 50,000 workers in the last 10 years, and only 3.8 percent are currently unemployed. Despite high employment levels, the average weekly hours for all Idaho employees in the private sector is 36.2, the lowest on record.
The labor market isn’t as sound as it once was. Fewer hours for regular employees and a high level of part-time employment doesn’t make for a vibrant economy.
Not until employers have better incentives to invest in new products and new businesses will they put more people to work for more hours. Only then will we see better economic growth.
Peter Crabb is professor of finance and economics at Northwest Nazarene University in Nampa. firstname.lastname@example.org. This column appears in the May 17-June 14, 2016, edition of the Idaho Statesman’s Business Insider magazine.