Profit Confidential Cautions U.S. Jobless Claims Low, but Labor Market Still in Turmoil

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Profit Confidential advises that while the number of Americans claiming to be jobless is lower, the labor market still faces a variety of problems.​

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Profit Confidential Cautions U.S. Jobless Claims Low, but Labor Market Still in Turmoil

Moving beyond the headline numbers is critical to understanding the difficulties facing many in the U.S. labor market.

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Profit Confidential (http://www.ProfitConfidential.com), an e-letter published by Lombardi Publishing Corporation, a 29-year-old consumer publisher that has served over one million customers in 141 countries, is cautioning that while U.S. jobless claims remain low, the broader U.S. labor market is still in turmoil.

In late March, the U.S. Department of Labor released its latest weekly unemployment insurance claims data. Seasonally adjusted U.S. jobless claims fell to 282,000, their lowest level since mid-February, and have been in decline since their peak level of 665,000 claims in March of 2009. (Source: “Unemployment Insurance Weekly Claims, U.S. Department of Labor web site, March 26, 2015; http://www.dol.gov/opa/media/press/eta/eta20150485.pdf.)

“Moving beyond the headline numbers is critical to understanding the difficulties facing many in the U.S. labor market,” says financial analyst Alex Volsky. “Total measures of labor market health, like the underemployment rate, labor force participation, and wage growth, aren’t as strong as one would suspect, given the historically low U.S. jobless claims.”

Volsky explains that the labor force participation rate sits at its lowest level since 1978. On top of that, the February jobs report released on March 6 revealed that 6.6 million Americans were employed part-time for economic reasons—they just couldn’t find full-time work. Another 2.2 million Americans were marginally attached to the labor force, meaning they looked for work at some point in the last year. (Source: “The Employment Situation, March 2015,” U.S. Bureau of Labor Statistics web site, April 3, 2015; http://www.bls.gov/news.release/empsit.nr0.htm.)

While the U.S. unemployment rate declined from 10% in 2010 to just 5.5% in February, few are questioning what kind of jobs are being created. Since 2000, the U.S. has lost five million manufacturing jobs, and since 2009, jobs related to retail have increased nine percent. On top of that, wages and income growth have stalled; over the last 10 years, the real median income has dropped by nearly $5,000, from $56,800 a year in 2000 to $51,939 in 2013. (Source: “All Employees Manufacturing,” Federal Reserve Bank of St. Louis web site; http://research.stlouisfed.org/fred2/series/MANEMP, last accessed April 9, 2015.)

“Despite the encouraging unemployment numbers, the underlying data is not encouraging. If the jobs market continues to struggle, the U.S. economy won’t grow. Americans working part-time or working jobs where the pay isn’t higher will simply lead them to pull back on their spending, which is bad news for an economy that relies largely on consumer spending to prop up GDP,” Volsky concludes. “The bottom line is that wages are stagnant. While it is a positive that jobless claims are at all-time lows, they do not fairly reflect the depressed labor market.”

For more information on Profit Confidential, visit http://www.ProfitConfidential.com. Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation visit http://www.lombardipublishing.com.

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Wendy Potter
@PConfidential
since: 04/2010
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