A tightened labor pool

Sundance analyzes in the Conservative Treehouse on the May jobs report.

The Bureau of Labor Statistics (BLS) provides the May jobs report. Top line job gains were moderate at 75,000 and the unemployment rate holds steady at 3.6%. However wage growth of 3.1%, and a monthly shift of 299,000 jobs from part-time to full-time reflects tight labor market in specific Main Street (blue and white collar) jobs.

The overall gain of 75,000 for May is low considering the economic growth. However, a review of the underlying data tells a story of a tightened labor pool; specifically inside the Main Street, middle-class, blue and white collar labor market.

Overall wage growth of 3.1% is very strong, and driven primarily by increased wages in “non-supervisory” payroll; ie. the actual workers (non mgmt). May was the 10th straight month with annual wage gains of at least 3 percent. Wages for non-supervisory workers continue to rise at a faster rate of 3.4 percent.

With inflation remaining low (1.4%); and assuming inflation is unchanged in May; the 3.4% non-supervisory wage growth, at current wage rates, is equivalent to nearly $900 per year in real wage growth for a blue-collar worker at 40 hours per week. [Table B-8]

We see the second large indicator of a tight Main Street labor market in the shift from part-time to full-time employment:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 299,000 in May to 4.4 million. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. (BLS Link)

In addition to the wage growth, the PT to FT shift is a key metric. You might be familiar with how many people in the Obama economy were shifted from Full-Time status to Part-Time status as a result of prior administration policy (Obamacare, etc.). The chief complaint was people having to take two PT jobs instead of one FT job etc.

We are now seeing a reversal pattern where part-time workers are being shifted into full-time positions. In the past 12 months 565,000 people have shifted from PT to FT. With more hours and higher wages it is Main Street workers who are benefiting.

Employment in professional and business services continued to trend up over the month (+33,000) and has increased by 498,000 over the past 12 months.

Employment in health care continued its upward trend in May (+16,000). The industry has added 391,000 jobs over the past 12 months.

Construction employment changed little in May (+4,000), following an increase of 30,000 in April. The industry has added 215,000 jobs over the past 12 months.

Employment showed little change in May in other major industries, including mining, manufacturing, wholesale trade, retail trade, transportation and warehousing, information, financial activities, leisure and hospitality, and government

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