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We’ve Regained the Jobs Lost in the Recession, But the Recovery Isn’t Complete

The U.S. added 217,000 nonfarm jobs in May, fewer than in April but in line with economists’ expectations. But for once, the number that gets the most attention may not be the change in jobs, but the absolute number: 138.5 million, a new record. Five years after the recession ended, the U.S. finally has as many jobs as when it began.

That’s a largely symbolic milestone, one that doesn’t reflect population growth or other factors. I’ll have much more to say about the winners and losers in the slow economic rebound in a separate article Friday. But in the meantime, here are some initial thoughts on the numbers and what they say about a recovery that still has a long way to go.

A solid report and a steady trend: The monthly jobs report is notoriously volatile, so it pays to focus on the longer-run trend. May represents the fourth consecutive month of job growth above 200,000, the first time that’s happened since the recession ended in June 2009. Over the past year, the U.S. has added 2.4 million jobs. That’s a reasonably healthy pace of growth, although there’s little sign of acceleration; the year-over-year pace of job growth has been holding steady at between 2 million and 2.5 million for about 2½ years.

Good news in the household survey: The unemployment rate held steady at 6.3 percent, but that’s better news than it seems. The number of people reporting they were “employed” (based on a separate survey from the payroll figures) rose by 145,000. The reason the unemployment rate didn’t fall is that the number of people who were unemployed also rose, but not because people were losing their jobs. Instead, the increase was driven by people re-entering the labor force to look for work, a possible sign they thought the economy was improving. (As regular readers know, people only count as unemployed if they’re actively searching for work. That means the unemployment rate can be a misleading indicator, falling either because people found jobs or because they gave up looking.)

Jobs growth suggests GDP will rebound: When the Commerce Department said last month that gross domestic product shrank in the first quarter, most economists said not to worry; the contraction, though unusual, was the temporary result of a harsh winter and didn’t reflect a broader slowdown in economic growth. Friday’s jobs report provides further evidence that they were right. The economy has added an average of 214,000 jobs a month so far this year, which hardly suggests a recovery on the verge of fizzling out. Moreover, the retail sector, which was hit particularly hard by the harsh winter, has rebounded fairly strongly this spring, suggesting consumers are once again hitting the mall now that the sun is shining.

Not just jobs — good jobs: One of the persistent concerns about the recovery has been not just that job growth has been weak, but that many of the jobs that are being created are low-wage and part-time. But as the job market strengthens, that trend may at last be reversing. Average hourly earnings rose by 5 cents in May and are up nearly 50 cents over the past year, representing a 2.1 percent growth rate. That’s far from spectacular, but it’s faster than the rate of inflation and it’s an improvement from earlier in the recovery. Meanwhile, full-time employment is up by more than 2.4 million in the past year, while part-time employment is down by 500,000. The picture isn’t entirely rosy, however. There are still more than 7 million people working part time because they can’t find full-time jobs. And 14,000 of the jobs created in May were temporary jobs, continuing a long-running shift toward temporary employment during the recovery.

Still tough for the unemployed: Just over 2 million unemployed workers found jobs in May, but 2.3 million left the labor force. That represents the 48th time in the past 49 months that jobseekers were more likely to quit looking than to find work. The job-finding rate — the share of the unemployed getting job — ticked down slightly in May, though the longer-run trend is positive. Long-term unemployment continued to decline in May — the number of people out of work for more than six months has dropped by nearly a million in the past year, and the median duration of unemployment is at its lowest level of the recovery — but that probably reflects people giving up looking for work, not finding jobs. Recent research suggests that few of the long-term unemployed are finding sustainable employment.

Watch the revisions: Friday’s report didn’t contain any major revisions; March’s payroll figure was left unchanged, and April’s was revised down by an insignificant 6,000 jobs. But the revisions are often much bigger, so it’s worth remembering that the May figures are preliminary and carry a significant margin of error. So treat all of the commentary with an appropriate dose of salt.

Ben Casselman was a senior editor and the chief economics writer for FiveThirtyEight.