April 2011 Employment Report

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Headline numbers from the April employment report were encouraging. That report showed the U.S. economy added 244,000 nonfarm jobs; even the 0.2 percentage point jump in the unemployment rate (to 9.0 percent) was heralded as good news because more people apparently looked for work in April. That job gain brought the change in nonfarm employment back nearly to 5 percent below the December 2007 peak.
 

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Those upbeat headlines were partially offset by somewhat less encouraging details. For example, the number of persons employed full time fell by 291,000 in April, while the number of persons employed part time for economic reasons rose by 167,000. This is not the outcome one would expect from an improving economy.

Nearly 6.5 million people were not counted as being in the labor force but would like a job now -- a jump of 232,000. Also, the total number of persons not considered part of the labor force rose to a new record above 86.2 million.

Other discouraging aspects of the report included a civilian labor force participation rate that remained unchanged at 64.2 percent (a 27-year low) while the annual percentage increase in average hourly earnings of production and non-supervisory employees hovered barely above 2 percent -- the slowest pace of growth since 2Q2004.

Although job gains were broader-based in April than in March, we can’t help but notice that 17 percent of the new private-sector jobs occurred in “Leisure & Hospitality.” In light of McDonald’s hiring of 62,000 workers in April, we suspect that many of those service jobs were part-time and low-paying positions.