More Americans went to work in May than ever before.
The number of payroll jobs increased by 217,000 to hit a record high of 138.5 million, the Bureau of Labor Statistics reported Friday, finally regaining the peak achieved in January 2008, when the U.S. economy was just beginning to enter the recession.
Although an important milestone, Friday's record high number of jobs does not represent anything like a healthy U.S. labor market. Employment remains well below its pre-financial crisis growth trend.
The U.S. remains 7.1 million short of the number of jobs it would have if employment kept up with population growth, according to the left-leaning Economic Policy Institute's analysis. The nonpartisan Congressional Budget Office's more conservative estimate places that number at 5.5-6 million.
The true size of the "jobs gap" is uncertain because it’s not known how many of the millions of people who dropped out of the labor force over the past six years did so because of the severity of the recession and still want jobs.
But it's clear that the ongoing economic recovery, now in its 45th consecutive month of job growth, is weak. Even at the past three months' faster rate of job creation, It would take three years and eight months to restore the labor market's health, according to the Hamilton Project's jobs gap calculator.
The 2009-2014 recovery has lagged other postwar recoveries, and continues to show few signs of returning to trend, as this CBO chart shows:
Why the recovery has been so weak is a matter of controversy.
Over the course of his presidency, Barack Obama has attributed the slow growth to the severity of the financial crisis that began on President George W. Bush's watch. In making that case, his advisers have cited the work of economists Carmen Reinhart and Kenneth Rogoff, who assembled evidence that financial crises lead to more painful recessions.
Yet other academic work has challenged that narrative. Economists Michael Bordo of Rutgers and Joseph Haubrich of the Federal Reserve Bank of Cleveland found that deeper recessions, including those following financial crashes, usually lead to proportionately strong recoveries.
Some Republican economists, including former Bush Treasury official and Stanford professor John Taylor, have referred to this finding to argue that the weak recovery is the fault of Obama's policies, and that it could have been avoided if the administration and the Federal Reserve had followed the formula of predictable monetary and fiscal policy that led to the so-called Great Moderation of relatively steady growth over the previous 30 years.
More recently, however, Obama's top economic adviser Jason Furman has challenged the idea of the Great Moderation, saying that it never happened, and that instead the economy had been hiding systemic risk of severe recession between the late 1980s and the crisis.
Friday’s jobs report, which came in just ahead of analysts’ expectations for roughly 215,000 new jobs, was evidence of a slight acceleration in the slow, tepid jobs recovery. With May’s numbers, job growth has averaged 234,000 over the past three months, well above the roughly 180,000-a-month pace that has held since 2010.
The unemployment rate stayed at the post-recession low of 6.3 percent it reached in April after a steep 0.4 percentage point drop.
The unemployment rate holding at that low level was good news, given that labor force participation rose modestly by 192,000 in the month after declining by 800,000 the previous month, as measured in the BLS's household survey.
Although the labor force participation rate, at 62.8 percent, remains at multi-decade lows, a rising rate means that the unemployment rate remained steady because workers found jobs, rather than because they quit the job search.
Friday's report contained other signs of underlying strength. The U-6 unemployment rate, a broader measure of underemployment that includes discouraged workers and workers forced to work part time, fell one-tenth of a percentage point to 12.2 percent. Over the past year, the U-6 rate has fallen by 1.6 percent, mirroring the steep fall in the headline unemployment rate, which stood at 7.5 percent in May 2013.
While hours were unchanged, hourly earnings edged up by 5 cents to $24.38. Over the past year, wages have grown by 2.1 percent, slightly ahead of inflation.