Nikhil Kumar: America is getting back to work, but there aren’t jobs out at the margins

Global Outlook: Washington’s policies are playing havoc with the well-being of those trying to find work

The latest monthly unemployment report from the US Department of Labor confirmed that the world’s largest economy is on the road to recovery. Not only were the figures for June better than many had hoped for, but, crucially, estimates for jobs growth in previous months hadn’t been positive enough. The upward revisions in the data for April and May, higher by a combined 70,000, drove up the average for the three months to June to a healthy 196,000. That’s very close to the rate that economists believe the US needs to maintain to get better.

Good news? Yes, broadly. But the underlying data paints a more mixed picture. First, the really good news: what the June report, which showed an expansion in payrolls of 195,000, said about the all-important American consumer.

The gains were driven by the private sector, as government payrolls deal with the pressure of spending cuts. Manufacturing didn’t fare well but employment in the leisure and hospitality industries was strong, climbing by 75,000 last month. That means the sector has been adding jobs at an average rate of 55,000 per month in 2013 – a marked improvement on 2012, when it averaged 30,000 per month. Gains were strong in food services and drinking venues. The figures for that sub-sector were up by 52,000 last month.

Then there were the numbers on the retail trade, up by 37, 000. Dealers of cars and car parts hired 8,000 additional people in June, wholesalers added 11,000, while employment in building and garden stores was up by 9,000 (no doubt a reflection of the stimulus-driven strength in the housing market).

All this bodes well for the health of the consumer – a critical driver of US growth. The recruitment suggests that consumers are willing to spend in restaurants and shops, and that brightens the outlook for the coming months.

But further out, what kinds of jobs are being created? Here the data isn’t as upbeat as the headline numbers might suggest. As the pace of growth in jobs improves, it’s useful to think twice about the industries driving the figures. And in the leisure and hospitality sector, and in the retail industry, we are talking about the highest-paid jobs.

As the overall unemployment rate steadied at 7.6 per cent last month, the “U6 rate” jumped to 14.3 per cent from 13.8 per cent. What is the U6 rate? It’s a broader gauge of unemployment that includes people who, in bureaucratic parlance, are “marginally attached” to the labour force, as well as those who are employed part time for “economic reasons”. In English, the first group includes those who have looked for jobs but haven’t found suitable work, while the second group covers people whose hours might have been cut, or who have looked for full-time jobs without success.

The June jobs report was clearly positive; the trend is improving, slowly but surely. But it’s not all good news, because even as things get better, the report shows how the crisis appears to have changed the complexion of the job market.

And that’s something to bear in mind when considering the longer-term prospects of the world’s largest economy.

The cuts hit hardest for those who need help most

Talking about jobs, we’ve already touched on the US government spending cuts, whose imprint is obvious in the public payroll figures. But what’s happening to the unemployed? Yesterday’s report didn’t go into this – but there were some revealing (and troubling) figures from the National Employment Law Project (NELP) earlier this week that showed how the fiscal tightening imposed by Washington was playing havoc with the well-being of those struggling to find work.

The headlines about the so-called “sequester” of spending cuts have receded. But the NELP showed that it is having a significant impact on the benefits cheques that go out to the long-term unemployed. According to its figures, of the around $30bn (£20bn) in budget cuts taking their toll on the economy this year – minus the ones hitting medicare – $2.4bn are coming out of the benefits paid to the long-term unemployed. The impact, the NELP reckons, will be felt by around 3.8 million people during the course of the year. In other words: “The workers who have benefited least from the economic recovery are bearing the largest share of the burden of these domestic sequester reductions.”

How big is the burden? The average payment, according to the NELP, will fall by $43. That’s $43 out of $289, a significant reduction. These are people drawing on the Bush-era Emergency Unemployment Compensation (EUC) programme for support. The scheme extends the number of weeks of unemployment benefits that the long-term jobless can draw on for help.

Take California, where the number of workers seeking help under the EUC is the highest. The NELP says around 120,000 had their EUC benefits cut by nearly 18 per cent in May alone. It estimates that 429,000 will see cuts through to the end of September. By the year end, if the sequestration continues, the figure will be 531,000.

Heavyweights set scene for a ding-dong at Dell

Later this month, shareholders in Dell will finally get to vote on whether or not to accept the $24.4bn go-private deal put on the table by Michael Dell and the private equity firm Silver Lake Partners.

To recap, the proposal is being opposed by the billionaire investor Carl Icahn, who says Mr Dell’s offer undervalues the business and who wants to push through a plan to recapitalise Dell that he says will prove more valuable for shareholders.

It’s unclear how shareholders might vote. But what if they do reject Mr Dell’s proposal? The result then is likely to be a very public fist-fight between Mr Dell and Mr Icahn for the future of a struggling but still large business. Mr Icahn, among the most vocal activist investors on Wall Street, and his partners have already put forward a slate of new directors. If Mr Dell loses the vote, he might propose his own nominees. The vote is on  18 July. Fasten your seat belts. This could be fun.

scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
Life and Style
Customers can get their caffeine fix on the move
food + drink
newsRyan Crighton goes in search of the capo dei capi

Arts and Entertainment
Actors front row from left, Jared Leto, Jennifer Lawrence, Meryl Streep, Ellen DeGeneres, Bradley Cooper, Peter Nyongío Jr., and, second row, from left, Channing Tatum, Julia Roberts, Kevin Spacey, Brad Pitt, Lupita Nyongío and Angelina Jolie as they pose for a
Life and Style
techCould new invention save millions in healthcare bills?
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
peopleEnglishman managed quintessential Hollywood restaurant Chasen's
Life and Style
food + drinkHarrods launches gourmet food qualification for staff
Arts and Entertainment
Michael Flatley prepares to bid farewell to the West End stage
danceMichael Flatley hits West End for last time alongside Team GB World champion Alice Upcott
ebooksAn evocation of the conflict through the eyes of those who lived through it
Life and Style
Horst P Horst mid-fashion shoot in New York, 1949
fashionFar-reaching retrospective to celebrate Horst P Horst's six decades of creativity
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
Life and Style
Black Ivory Coffee is made using beans plucked from elephants' waste after ingested by the animals
food + drinkFirm says it has created the "rarest" coffee in the world
Life and Style

As Voltaire once said, “Ice cream is exquisite. What a pity it isn’t illegal”

Life and Style
food + drinkThese simple recipes will have you refreshed within minutes
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Service Desk Analyst- Desktop Support, Helpdesk, ITIL

£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Service Desk Analyst - (Active Directory, Support, London)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst - (Active Di...

Junior Quant Analyst - C++, Boost, Data Mining

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Junior Quant Analyst (Machine Learning, SQL, VBA)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition