June 2, 2017 – The unemployment rate fell to 4.3 percent in May, a new low for the recovery and the lowest level since 2001. However, this decline in employment was the result of people leaving the labor market; as the number reported as employed in the household survey actually fell, with the overall employment-to-population ratio dropping from 60.2 percent in April to 60.0 percent in May.
The establishment survey showed further evidence of a weakening labor market as the pace of job growth slowed to 138,000 in May. There were also substantial downward revisions to the prior two months’ job growth numbers, which brought the average for the last three months to just 121,000.
In addition, wage growth appears to be moderating rather than accelerating. The year-over-year increase in the average hourly wage is just 2.4 percent. Taking the average of the last three months compared with the average of the prior three months, wages are rising at just a 2.2 percent annual rate.
There is certainly little evidence in this report that the labor market is overheating or is likely to do so any time in the foreseeable future.
Dean Baker is Co-Director of the Center for Economic and Policy Research (CEPR) in Washington, DC. He is the author of Getting Back to Full Employment: A Better Bargain for Working People among other books.
CEPR is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people’s lives.
CEPR’s Advisory Board includes Nobel Laureate economists Robert Solow and Joseph Stiglitz; Janet Gornick, Professor at the CUNY Graduate Center and Director of the Luxembourg Income Study; and Richard Freeman, Professor of Economics at Harvard University.