The most recent employment report from the Bureau of Labor
Statistics (BLS) shows that the strong job growth from earlier this
year is long gone. Recent months have seen the job market settle
into a pattern of persistently weak gains.
This slow job growth isn't just bad news for people who are out
of work. There are ways this trend hurts the employed as well -- in
particular their finances.
The employment situation
80,000 new jobs for the month of June. The unemployment rate
remained at 8.2 percent, because with new people entering the job
market all the time, job growth has to be stronger to make a dent
in the unemployment rate.
Month-to-month, employment numbers can be erratic, but June's
job growth seems to fit into a lengthening trend of sluggish
progress. Prior to June's 80,000 new jobs, the figures were 68,000
for April and 77,000 for May.
June's job growth seems even weaker when you consider that
temporary help agencies accounted for 25,000 of those jobs.
Meanwhile, the manufacturing sector has seen a big step back in job
growth. Manufacturing employment grew by an average of 41,000 a
month in the first quarter of this year, compared to just 10,000 a
month in the second quarter.
Because slow employment growth indicates that fewer people are
going back to work and businesses are reluctant to invest, it means
less new money will be pumped into the economy going forward.
Low employment growth is a direct hardship for people in search
of a job, but it also casts a much wider circle of negative
implications. Here are two prominent ways that a weak job market
can hurt even the employed:
Low bank rates will be here for a while.
Savings account, money market and CD rates are all at extremely
low levels already, and while there isn't much farther for them
to fall, the weak economy indicated by the poor jobs report means
those low rates are going to stick around for a while. An
uncertain lending environment gives banks little incentive to
attract new deposits, because they don't have a profitable way of
putting that money to use. The same goes for the shaky investment
environment. Meanwhile, the Federal Reserve has responded to
continued economic weakness by renewing
its commitment to driving interest rates down
to unnaturally low levels.
Wage growth will be anemic.
Even if you already have a job, a weak job market can hit you in
the paycheck by watering down the pay raises you earn. When there
is little competition for labor, employers don't need to offer
strong raises. Both employers and employees are aware that there
is probably someone out there who would do a given job for less.
According to the BLS, average wage growth over the past year was
just 2.0 percent, which is barely enough to keep pace with
One other impact from the weak employment trend that you can
count on, for better or worse: Jobs will remain front and center as
an issue in this year's presidential campaign.