Three points about the labor market:
1. The unemployment rate is up—because more people are looking for jobs.
The unemployment rate climbed by half a percentage point to 5.5 percent in May, the Labor Department reported today. There were 8.5 million Americans reported as unemployed last month.
A year ago, the unemployment rate was 4.5 percent and there were 6.9 million Americans out of work. So is it all due to the economic downturn? Probably not. Zubin Jelveh reports that young workers have entered the labor force and are looking for jobs:
• Meanwhile, for those between 16 and 24, the unemployment rate jumped 2 percent, to 13 percent.
• But the biggest reason for the jump is the number of high schoolers looking for work. Their unemployment rate skyrocketed by 3.3 percent, to 18.7 percent.
Another interesting point from a commenter at Capital Gains and Games: "As gas and food inflation get worse, the nonworking spouses enter the job market to supplement shrinking real family income. Retirees look for jobs because their fixed incomes are being eroded."
2. Companies will survive the great baby boomer retirement.
A bright note from the economists at First Trust:
"The productivity boom that started in the mid-1990s continues to thrive, meaning long-term prospects for U.S. economic growth remain strong. Non-farm productivity is up 3.3% versus last year, while manufacturing sector productivity is up 4%. One implication of this is that as Baby Boomers gradually age into retirement—and growth in the labor force declines—firms will still be able to raise output by adding capital equipment and generating efficiencies in the way they operate."
3. Your income isn't really growing.
This probably doesn't come as a surprise. A sour note from the economists at First Trust: "Rising inflation continues to erode the value of workers' paychecks. Labor compensation grew at a healthy 4.9% rate in Q1, but only grew at a 0.6% rate on an inflation-adjusted basis."