The stealth boom in the U.S. job market continues. Payroll employment grew by 207,000 in July-a robust number that is roughly double the pace necessary to maintain full employment-but the surprise comes from revisions made to past months' numbers.
It works like this: the monthly Employment Situation report from the Labor Department includes hundreds of data series, and many of those are preliminary. In the case of the flagship number that most newspapers trumpet ("non-farm employment growth" from the establishment payroll survey), the report also includes a revision for the previous two months. Indeed, June and May figures were revised up by 20,000 and 22,000 jobs respectively. This means that yes, the current job news is good, but the revised news is even better.
Highlights from the Employment Report for July
- 5.0 percent unemployment rate
- 207,000 new payroll jobs
- 438,000 new total jobs
- 450,000 more people in the labor force
- Over the last year, 2.2 million new payroll jobs have been created
- Over the last year, 2.4 million new jobs have been created, in total
When the 2001 recession hit the U.S. economy, the total number of employed Americans dropped by 2 million over the course of the year, according to the BLS household survey, while the size of the labor force remained steady. But since the beginning of 2002, total employment has grown by over 6 million, which matches the nearly 6 million net new members of the U.S. labor force. (See Chart 1.)
Even so, some observers of the current economic scene worry that job creation is not keeping up with the growth in the population of new job seekers. That is, are U.S. companies and governments creating enough new jobs for all of the young people entering the labor force from high school and college? The answer is yes. The economy produced an average of 179,000 jobs per month over the last year, whereas the number of 20-54 year olds has grown by 77,000 a month in recent years, according to Census estimates. Older cohorts have grown even more, but they have lower workforce participation rates, which is the gist of the analysis by Federal Reserve economist Julie Hotchkiss.
This kind of strong employment situation really takes the hot air out of the sails of economic pessimists. Is this what all the supposed dangers of outsourcing, free trade, higher oil prices, a jittery dollar, and deficits add up to: a low unemployment rate and rapid job growth? There aren't many clouds on the economic horizon right now. Then again, that means there's very little excuse for bloated highway bills and other government excesses.
 Hotchkiss, Julie (October 2004), "Employment Growth and Labor Force Participation: How Many Jobs Are Enough?" Federal Reserve Bank of Atlanta, Working Paper 2004-25.