U.S. unemployment rate falls to 4.3 percent, but job growth underperforms expectations; shortage of skilled workers remains a concern

We cited several positive jobs reports yesterday in anticipation of today’s employment report from the U. S. Bureau of Labor Statistics. As it happens, the early reports were a little too optimistic. Here’s the top line from the BLS report:

Total nonfarm payroll employment increased by 138,000 in May, and the unemployment rate was little changed at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care and mining.

At Calculated Risk, economist Bill McBride writes,

The unemployment rate decreased in May to 4.3%.  This is the lowest unemployment rate since 2001.

This was below expectations of 185,000 jobs, and the previous two months were revised down.  A disappointing report.

That seems to be the theme: Job creation below expectations and the lowest unemployment rate in 16 years – what BLS calls “little changed” as it’s barely down from 4.4 percent in April – is disappointing. 

The Guardian newspaper also cites the ADP report we commented on yesterday:

While the number of new jobs created in May was below the 180,000 that economists had been expecting, the US has now added jobs for 80 consecutive months. Wage growth, however, has remained weak and the number of people in part-time work has remained high.

Expectations for a bumper jobs report had mounted after ADP, the US’s largest private payroll processor, announced employers had added 253,000 jobs in May – well above the 180,000 economists had been expecting.

Mark Zandi, chief economist of Moody’s Analytics, said: “Job growth is rip-roaring. The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force. Increasingly, businesses’ number one challenge will be a shortage of labor.”

But the Bureau of Labor Statistics report for May fell well short of expectations and the office cut its tally of employment gains in March and April by a combined 66,000 less than previously reported.

Zandi may have been too exuberant in his assessment of the pace of job growth, but he’s clearly accurate in his judgment of the labor shortage employers face. Below we share some stories of how Washington schools are striving to boost education attainment to expand opportunities for students in a more demanding job market.

At FiveThirtyEight Ben Casselman writes, “Don’t worry about the jobs market yet, but pay attention.” Acknowledging that the job growth was below economists’ expectations, he adds,

But taken on its own, May’s job growth wasn’t bad: It represented the 80th straight month of gains, the longest such streak on record. The economy has added more than 16 million jobs since the labor market bottomed out in early 2010.

He digs further into the data and finds reasons for concern, including that the unemployment rate is falling for the wrong reason:

The labor force — everyone who is either working or actively looking for work — shrank by more than 400,000 people, and there were actually 233,000 fewer people working in May than in April. (These figures are based on a separate survey than the more widely reported job totals. They generally move in sync but can diverge over brief periods.) The participation rate, which measures the share of adults who are in the labor force, fell two-tenths of a point, its second straight monthly decline.

We’ll close this by citing two recent reports of strides being made by local schools in meeting the demand for qualified employees by assuring that their students have the training and education they need to take advantages of the opportunities being created in our state.

The Seattle Times reports on how the Chehalis school system is preparing students for postsecondary education.

Lewis County, the southwest Washington county where Chehalis is located, has one of the lowest college-going rates in the state. It’s symptomatic of a big disconnect in Washington state — where there’s a boom in high-paying, mostly high-tech jobs, yet two-thirds of students don’t earn the two- or four-year degrees they need to apply for them.

Statewide, just 26 percent of the high-school graduating class of 2007 had earned a bachelor’s degree six years after graduation, well below the national rate for even rural schools, which is 32 percent.

The numbers are lower in Chehalis.

Until recently, Chehalis School District staff didn’t realize that only 20 percent of their students went on to earn a four-year degree. That wake-up call came when the district commissioned a study, paid by the district’s foundation.

The surprisingly low figures shocked district officials into a slew of changes. That included talking frequently to students about the importance of college, as well as fundamental fixes in how teachers teach.

The district also has joined forces with the region’s community college to help make sure Chehalis students who go there finish their degree.

Read the story to learn how teachers and administrators are pulling together to increase opportunities and how they’re seeing early success.

In Yakima, similar challenges are also prompting concerted action. The Yakima Herald-Republic editorial board praises postsecondary programs that are meeting critical needs.

A four-year degree remains an odd fit for many job openings in the Yakima Valley, but a high school degree isn’t enough, either. Awareness is growing about how automation and computerization in the workplace are putting a premium on mechanical and computer know-how; right at this minute, employers are looking for workers to fill these jobs. For those positions, a number of less-expensive and more-accessible education options allow students to get the skills they need.

A story last week in the Yakima Herald-Republic detailed paths that lead students to jobs that pay a family wage. Technical-school degrees, apprenticeships and certificate programs can take future employees into a range of high-demand jobs in fields such as construction and manufacturing. The jobs include electricians, computer support specialists, legal assistants, firefighters, construction equipment operators and machinists.

 The employment report may have been disappointing; but some of the steps being taken to make sure students have the education and training required for the jobs being created are encouraging.