fb-pixel

Mass. jobless rate drops to prerecession level

Employers add 7,400 new jobs in May

The jobs picture keeps getting brighter in the Bay State.

The Massachusetts unemployment rate edged down to 4.6 percent in May from 4.7 percent the previous month, matching the low point before the so-called Great Recession began in December 2007, the state's Executive Office of Labor and Workforce Development reported Thursday.

Massachusetts employers, meanwhile, added 7,400 jobs in May, the ninth consecutive month of payroll gains for the state. During the past year, the state's economy has created more than 70,000 jobs, the strongest job growth since the dot-com boom at the beginning of the century.

Advertisement



"Another month, another good employment report," said Alan Clayton-Matthews, a Northeastern University economics professor. "This state is growing robustly."

The jobs data marked another milestone for Massachusetts, which has generally recovered from the recession faster than the nation as a whole, led by the technology, biotechnology, and health care sectors.

The falling unemployment rate — it's now at about half the recession peak of 8.8 percent — is shifting the balance of power to workers, who are increasingly able to find new jobs quickly, choose between offers, and bargain for higher pay.

In the first quarter of 2015, wages and salaries in Greater Boston surged by nearly 4 percent from a year earlier, the biggest gain in the nation for large metropolitan regions, according to the US Department of Labor.

Nationally, job and wage growth have been spotty in the first half of the year, pushing back expectations that the Federal Reserve would raise its key short-term interest rate — which it has held near zero since the end of 2008 — as early as this month.

Fed policy makers on Wednesday deferred any increase until at least September, downgrading forecasts for economic growth to no more than 2 percent from earlier estimates as high as 2.7 percent.

Advertisement



The US unemployment rate was 5.5 percent in May.

Andrew Balow, who graduated from Northeastern University in 2014, landed two jobs in six months. Launching a search in December, he was hired in March as a design engineer for an electrical contractor working on transit projects in New York City. On Tuesday, Balow, 24, was offered a new job as a field service engineer at the Billerica alternative energy company Nuvera Fuel Cells.

He said Nuvera offered a 5 percent increase in salary and 50 percent more vacation time than he had at his New York job.

"I'm glad I was able to jump into a little bit more money," Balow said. "Slowly, steadily, [the economy] is improving."

Unemployment in the state is still well above the levels during the last tech boom, when the jobless rate fell to 2.6 percent in May 2000. But Clayton-Matthews said the benefits of this expansion are spreading beyond the technology and health care sectors as the economy enters what analysts call a "virtuous circle," in which more jobs lead to rising income, which spurs more spending, which leads to higher demand for products and services, and ultimately more jobs.

Retail employment, for example, jumped by 1,500 jobs in May, the state reported. Construction companies, riding a commercial building boom, added 3,500 jobs, the biggest monthly gain in more than 15 years. Manufacturing added 600 jobs last month, financial activities added 700 jobs, and education and health services gained 500 jobs.

Advertisement



Education and health services, which includes universities and hospitals, added nearly 20,000 jobs during the past year, according to the state. Another key sector, professional and business services, which includes technology, scientific research, and consulting firms, added more than 18,000 jobs in the past year.

"This speaks to a steady and consistent pattern of economic growth, which is what you really want to see," said Chris Geehern, executive vice president at Associated Industries of Massachusetts, the state's largest employers group.

Many companies, however, remain wary of expanding too rapidly, analysts said, keeping their eyes on developments that could upset the global and US economies, such as a default by Greece on its debt or a significant slowdown in China's economy.

"Employers remain cautious," Geehern said. "They don't want to go out and hire 25 new people without clear confidence that the growth of their company is going to justify that."

While the labor market is broadly improving, workers with less than a high school diploma are still experiencing high unemployment, said Michael Goodman, executive director of the Public Policy Center at the University of Massachusetts Dartmouth.

Many long-term unemployed are still struggling to find work.

"We have to temper the good news with the recognition that this rising tide has not been lifting all boats," Goodman said.


Karishma Mehrotra can be reached at karishma.mehrotra@globe.com. Follow her on Twitter @missmishma.