South By North Strategies, Ltd.

CHAPEL HILL (June 4, 2010) – The national employment report for May is an unimpressive one. Last month, employers added 431,000 more payroll positions than they eliminated. Almost all of the gain, however, was attributable to the hiring of temporary workers by the U.S. Census Bureau.

“The May payroll report is much less impressive than it first seems,” said John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Almost all job growth was due to temporary hiring by the U.S. Census Bureau. When census hiring is excluded, the nation netted just 20,000 positions in May.”

In May, the nation’s employers added 431,000 more payroll positions than they cut. Gains occurred primarily in the public sector due to the hiring of 411,000 temporary census workers by the federal government. The rest of the economy netted just 20,000 positions. The largest private-sector gains occurred in manufacturing (+29,000) and in professional and business services (+22,000), primarily in the temporary help services sub-industry. Construction payrolls fell by 35,000 positions, which erased many of the industry’s recent gains. All other major industry groups recorded little or no change.

“The May employment report is an uninspiring one that highlights just how dependent the economy is upon policy supports and government action,” noted Quinterno. “If not for temporary census hiring, the numbers would be much worse.”

Weak job prospects also are reflected in the May household survey. Last month, 15 million Americans – 9.7 percent of the labor force –  were jobless and actively seeking work. Proportionally more adult male workers were unemployed than female ones (9.8 percent vs. 8.1 percent). Similarly, unemployment rates were higher among Black (15.5 percent) and Hispanic workers (12.4 percent) than among White ones (8.8 percent). The unemployment rate among teenagers was 26.4 percent.

Furthermore, newly available data show that 7.8 percent of all veterans were unemployed in May; the rate among veterans who had served since September 2001 was 10.6 percent.

“In developments inconsistent with recovery, 322,000 individuals left the labor force in May, and the share of the adult population engaged in economically productive activities fell,” added Quinterno. “Compared to a year ago, the labor force is smaller, fewer people are employed, and more people are unemployed.”

Jobs remained hard to find in May. Last month, 46 percent of all unemployed workers had been jobless for at least six months. Many other individuals simply stopped looking, and counting those individuals and those working part-time on an involuntary basis brings the underemployment rate to 16.6 percent.

“Strip away census hiring, and the May employment report is weak,” observed Quinterno. “The economy remains dependent on public supports, and it is unclear if it will be able to stand on its own as those supports fall away over the summer.”