U.S. job growth surges in April, but many have stopped looking for work

U.S. job growth increased at its fastest pace in more than two years in April, and the unemployment rate dived to a five-and-a-half year low of 6.3 percent, the Labor Department said Friday in its latest monthly report, suggesting a sharp rebound in economic activity.

The new jobs report, which was more positive than many analysts expected, showed that the United States may finally be close to recovering from the 2008 global financial crisis. But the report also contained some potentially troubling figures that suggest that the lower unemployment rate may be partly due to more people’s having given up looking for work and that low-wage and temporary jobs may be the U.S.’s new economic normal.

The report showed that in April the U.S. added 288,000 new jobs, nearly all of which were in the private sector. About 203,000 of those jobs were full time. The Labor Department revised up the two previous months’ numbers by 36,000 combined, a potential sign that job gains are part of a positive trend and not just a one-month anomaly. The revised numbers brought the three-month average to 214,000 new jobs.

The gains put the active U.S. labor market at just 120,000 jobs below where it was before the Great Recession, leading some economists to say the latest report is proof that the economic recovery is in full swing.

But that’s where the positive news in the report ended.

Jobs have been added, but because of population growth, the percentage of Americans working has remained virtually unchanged since 2008. While the unemployment rate fell to 6.3 percent from 6.7 percent — the biggest drop since 2008 — some say that may just mean more people have quit looking for work. A whopping 806,000 stopped actively searching for jobs last month, according to the report. That dragged the labor force participation rate down to 62.8 percent, matching December's number. Before December, the labor force participation rate hadn't dipped so low since the late 1970s.

“That brings into question the long-term capacity of the economy for growth,” said Sherle Schwenniger, director of the Economic Growth Program at the New America Foundation.

Another potentially negative sign: Following a trend in recent years, last month’s gains came from typically lower-wage sectors such as health care, retail and professional and business services — a category that includes temporary staffing agencies.

The surge in temp workers may show that while employers are hiring, they are still skittish about the future strength of the economy.

“There’s still lingering uncertainty, and employers like the flexibility of temp workers,” said Susan Houseman, a senior economist at the Upjohn Institute for Employment Research.

Still, the sheer size of the jobs gains last month had most economists calling the report an overall positive sign for the U.S. economy. Given the previous five years of anemic growth, economists say even a report as mixed as this one is good news in postrecession America.

“It’s not like we’re going to get back to the same growth from before the recession,” said Dean Baker, a co-director of the Center for Economic Policy and Research. “But over 200,000 jobs — that’s not bad.  It’s reasonably good.”

With wire services