May 2012 Welch Employment Index: The Labor Market Recovery Has Slowed

The Welch Consulting Employment Index is 94.5 for May 2012, up 1.1% from May 2011 (seasonally adjusted).  An index value of 94.5 means that full-time equivalent employment (from the BLS household survey) is 5.5% below its level in the base year of 1997, after adjusting for both population growth and changes in the age distribution of the labor force.  The index is up about 2.6% from its trough in July 2011, but almost all of the gains were in the second half of 2011.  The index is down slightly over the past three months.  The current value of the index is 6.9% lower than the pre-recession peak reached in January 2007.

The Welch Consulting Employment Index, disaggregated by gender, shows that the labor market recovery has been weaker for women than men over the past year.  Of course, men lost more jobs than women during the first year of the recession and therefore had more ground to make up in the past three years.  The index for men is 92.3 for May 2012, up 1.5% over the past twelve months, but down 7.7% from its pre-recession peak.  The index for women is 97.3 for May 2012, up 0.5% over the past twelve months, but down 6.1% from its pre-recession peak.  Finally, since President Obama took office in January 2009, the employment indices are down 1.6% for men and down 3.5% for women.

Technical Note: Full-time equivalent employment equals full-time employment plus one half of part-time employment from the BLS household survey.  The Welch index adjusts for the changing age distribution of the population by fixing the age distribution of adults to the 1997 base year.  The Welch Index adjusts for population growth by fixing total population to its 1997 level.  Seasonal effects are removed in a regression framework using monthly indicator variables.