May was a very weak month for jobs. Nonfarm payrolls increased by less than 25 percent of the recent rate with 54,000 net new jobs created and an unemployment rate of 9.1 percent. 45 percent of our unemployed, 6.2 million people, have been out of work for over 27 weeks. Average hourly earnings increased by .3 percent. This continues a trend of earnings increasing more slowly than prices. Flat wages, rising prices and high unemployment continue to reduce confidence and comfort among consumers and business. The U-6 broad measure of unemployment stands at 15.8 percent in May. U-6 includes people who are part-time but seek full time work and those who want and need work but, have stopped actively working.
We continue to see large job losses in the public sector, 29,000 in May. Job losses are centered in local governments that reduced payrolls by 28,000. 17,500 of these local layoffs were in local education employment. The Federal government added 1,000 jobs and states shed 2,000 jobs. Three of four state and local jobs are local jobs and this is where cutting is heaviest. It is worth remembering that local government services are essential support for many low income Americans. In addition, local jobs are historically important income and opportunity supports for the middle class. Local governments disproportionally employ veterans, women and people of color. Major losses of employment in local employment will fall very hard on these groups, particularly in a weak economy context.
This was a short week long on troubling economic news. The week began with a very distressing housing report. The residential real estate market has clearly double dipped. Consumer confidence and most leading economic measures are flashing warning. Greek debt, the U.S. debt ceiling and Japanese fallout continue to contaminate the global economy. Energy and food prices are combining with developed world weakness to challenge emerging market economic growth.
Productivity in Q1 2011 continued its rise. Americans are working harder and harder, despite the recession. We expect to see some increase in productivity as times are tough and job insecurity runs high. We have seen a remarkable pattern develop. Productivity, what we are able to make/do with our work time, keeps rising. Wages are lagging in this process. In Q1 2011, unit labor costs increased by .7 percent. This tells us that wages increased more than output last quarter. Sadly, prices increased more than wages. This means that real wages, what we can buy with our work, keep falling.
Despite a political chorus to the contrary, foreign-born workers and immigrants have suffered mightily in our weak labor market. Across 2010, foreign-born workers had an average unemployment rate of 9.8 percent as compared to 9.6 percent for American born workers. Foreign-born workers in the U.S. are mostly Hispanic, nearly 50 pecent, or Asian, 22 percent. Foreign-born workers earned an average weekly full time sum of $598 while American workers earned an average of $771. Thus, the foreign born earn 22 percent less than their U.S. born counterparts.
The duration of unemployment continues to mark this labor market as particularly painful for millions. Before this recession the average unemployed job seeker was able to find work after five weeks. This doubled to 10 weeks across 2010. Likewise, people are sticking to the search for 20 weeks before giving up, before this recession that number was only 9 weeks. Extended unemployment benefits may be influencing these numbers. We can tell that the amount of waiting and searching for jobs is structurally different than it was before this recession.
Our economy continues to struggle. The bottom quintiles are still very much in a recession. Residential homes have lost 33 percent of their value. This is the only asset that middle and lower middle class Americans own. The job market remains weak. Wage growth has been anemic and has failed to keep up with rising food and energy prices. Local public services and jobs are being cut. There is concentrated suffering and fear in the bottom 60 percent of U.S. households by income. This will be pronounced over the summer and may be the shaping x factor of the 2012 election cycle.