The June employment report delivers strong proof of an accelerating economy, with robust job gains and a plunging unemployment rate. With the addition of 288,000 jobs, it was the fifth straight monthly gain above 200,000. The last time that occurred was in 1999 during the tech boom. The unemployment rate, meanwhile, fell from 6.3 to 6.1 percent – a six-year low.
Employment gains in April and May were 29,000 higher than previously reported. Meanwhile, employers added 1.4 million jobs in the first six months of the year – the strongest six months of job growth since 2006. The better-than-expected employment report affected a few economic factors, including the Dow Jones Industrial average climbing above the 17,000 mark for the first time ever, and could force the Federal Reserve to raise interest rates sooner than it had planned.
In the June jobs report, virtually every major industry added jobs, led by professional services, retail, restaurants, healthcare, finance and manufacturing. Professional and business services added 67,000 jobs, while retailers hired 40,000 workers and restaurants added 33,000. Also in June, the healthcare industry continued its steady hiring pace, creating 21,000 new positions. Manufacturing added 16,000 jobs in June, with all of the increase in durable goods manufacturing. Lastly, financial activities added 17,000 jobs in June, with a gain of 9,000 in insurance carriers and related activities.
Unusual Jump in Part-Time Employment
Looking more closely into the June jobs report, one interesting trend emerged in the number of people who worked part-time. Although the number typically ebbs and flows from month-to-month, the standard deviation is 287,000. This month, it jumped by 799,000, which was the largest one-month gain since January 1994. At the same time, there was a 523,000-person decline in full-time workers, the first since October.
Interestingly, most of the part-time increase in June was comprised of workers who voluntarily opted to work part-time. According to the survey of establishments, it was high-paying sectors that were creating jobs in June. However, all-in-all over the past year, 10,000 new part-time jobs have been created versus 2.12 million full-time jobs.
Addressing Several Wage Issues
Two issues surrounding wages remain at the forefront of economic debate – stagnant wages and increasing the federal minimum wage. Although tremendous progress has been made on the jobs front, many members of the administration and economic analysts maintain concern over slow increases in income and wages. Hourly wages, for example, only rose 0.2 percent and are up 2 percent in the past 12 months, which may not be enough to keep up with rising prices.
Additionally, a push continues for an increase in the federal minimum wage to $10.10 an hour from its current $7.25. According to a CNN/ORC poll conducted earlier this month, 71 percent of Americans support raising the minimum wage. The majority was strongly represented by both men and women. When asked how high the minimum wage should be, 36 percent of those polled said it should be increased to $10.10 an hour, another 19 percent said they would prefer it to be increased to something less than $10.10, and 16 percent said they would like it set higher than $10.10.
While Congress continues to address the issue, many states and cities have taken their own action on the subject. Just last week, Seattle approved a gradual increase to $15 an hour, which will make it the highest in the nation.
Construction Sector Threatened by Federal Transportation Funding Cuts
Construction employers added 6,000 workers last month, as the industry’s unemployment rate dropped to 8.2 percent, its lowest June level in six years according to the Associated General Contractors of America (AGC). Despite recent job growth, the industry has struggled since the recession, as employment in the sector still remains above 1.7 million jobs or 22 percent below its 2006 peak.
Over the past six years, the number of unemployed workers who last worked in construction declined by 1.075 million, but industry employment increased by only 512,000. The construction sector was one of the hardest hit industries in the Great Recession, and only about one in four of those jobs have been recovered.
Employee and Consumer Confidence Soar
Employee confidence reaches a seven-year high, according to the June Randstad U.S. Employee Confidence Index. The Index rose 2.6 points to 58.1, the highest level on record since August 2007 before the start of the recession. It appears reports of the positive economic indicators during the past several months have resonated with U.S. workers, whose confidence in the job market, economy and their own personal employment situations all rebounded to multi-year highs.
Contributing to the uptick is workers’ improved outlook on their own job prospects and also their current employers’ future. Half of all workers feel confident in their ability to find a job, up from 47 percent last month, and more than six-in-10 (61 percent) are confident in the future of their current employer. Uncertainty regarding employees’ job security levels is truly diminishing, with 75 percent of the U.S. workers indicating it’s unlikely they will lose their job in the next 12 months.
In line with the Randstad Employee Confidence Index, findings from The Conference Board Consumer Confidence Index continue to improve. The Index now stands at 85.2, up from 82.2 last month, and marks its highest level since January 2008. June’s increase was driven primarily by improved current conditions and consumers’ assessment of business conditions. In fact, consumers stating jobs are ‘plentiful’ edged up to 14.7 percent from 14.2 percent in May, while those claiming jobs are ‘hard to get’ declined to 31.8 percent from 32.2 percent.