“Good” March jobs report may not be so good

The markets are gearing up for the all-important jobs report due out Friday. The report will likely show that last month the economy, once again, added hundreds of thousands of jobs. It’s also expected to reveal the rate of U.S. unemployment to be in the seemingly impressive 5% range. Good news? Not so fast.US-unemployment-jobs-fair-007

The headline unemployment rate doesn’t take into consideration the millions of people working part time who really want to work full time, nor does it reflect the millions of Americans who have simply given up looking for jobs. Most important, the unemployment rate doesn’t tell us anything about the utter lack of wage growth.

Let’s face it, 5.5% unemployment, just ain’t what it used to be. At any other point in our economic history, 5.5% unemployment would have felt like a godsend. Americans would tell you they felt extraordinarily prosperous and there was certainty in their economic futures. Today, middle-class Americans hardly feel prosperous. And, it’s no wonder. The U.S. economy is barely registering growth (less than 3% again last quarter), while the latest read on corporate profits shows a recent decline. Meanwhile, adjusted for inflation, Americans’ wages are basically stuck where they were nearly two decades ago.

So, does it really matter that we’re adding hundreds of thousands of jobs when those jobs aren’t paying enough to sustain a middle-class family? While the most optimistic might argue that any kind of job growth is a step in the right direction and eventually, as the economy strengthens, those low-paying jobs should become better paying, I’d remind them: It’s been six years. Typically, in a post-recession environment, the economy should fare far better than this. Historically, 4% to 5% gross domestic product growth is a reasonable expectation, along with wage growth near 3.8%. Yet, we’re nowhere near that.