10/16/2014 08:50 am ET Updated Dec 16, 2014

The U.S. Labor Market: Recovery?

In the aftermath of the latest jobs report from the Labor Department, there is a disturbing tendency to declare the recovery a success. After all, the economy created 248,000 jobs in September and the unemployment rate fell to 5.9 percent. Fabulous. On top of that, the weak August number of 148,000 jobs was revised up to 185,000 jobs. Even better.

Not so fast. As outlined in my most recent video some of the key facts about the labor market are not so upbeat. Full-time, good-paying work is the acme of labor market experience. Unfortunately, there were 2.8 million fewer Americans working full-time, year-round in 2013 than before the recession hit in 2007.

The slow rate of quality job growth is reflected in some troubling labor market dynamics. At present, the probability of an unemployed man finding a job is only 23.5 percent. Even more troubling, only in 2014 has this finally exceeded the probability that the unemployed man will simply drop out of the labor market (currently 23.4 percent). For women it is still the case that they are more likely to quit looking than get a job.

The upshot is reduced labor force participation, down 3.3 percentage points since before the recession, and a shrinking labor force. These trends continued in the most recent report. The decline in the unemployment rate was down in part because labor force participation fell by 0.1 percentage points (to a low not seen since 1978) as 97,000 people left the labor force.

In short, the quality of labor market dynamics remains low and the broadest measures of labor market activity remain subdued.

The other key feature is that work is not generating enough income. The real median household income is 8 percent below what it was before the recession. Inflation-adjust average hourly earnings are only 77 cents higher. In September, this continued as average hourly earnings and hours of work were essentially unchanged. It is hard to see how the economy will upshift significantly without better earnings and income data.

The top-line numbers may appear promising. But a closer look under the surface of the labor market shows that the U.S. has a long way to go to really recover from the Great Recession.