America's job market misery may be ending

Friday's job numbers were music to the ears of beleaguered middle-class families: After a nine-year slog, the U.S. economy has finally pushed employment back over its prior peak. It was a round trip of nearly 9 million jobs.

But of course, that doesn't fully capture what's happening in the job market. On a seasonally adjusted basis, we're still below the 2007 high. And using the more meaningful employment-to-population measure, we're still well below both the 2007 peak and the late 1990s peak at 56 percent now vs. 60 percent and 62 percent, respectively. Moreover, real household income has been drifting lower as inflation bites.

Yet, the sun is beginning to break through the clouds here -- which could finally usher in a period of good news for job seekers.

For one, demand for new workers is solid. The economy has increased payrolls by more than 200,000 per month for four months in a row -- with indications five in a row is likely -- a string of gains not seen since the tech boom of the 1990s. Factory overtime increased to 4.6 hours in May from 4.4 hours in April, a sign that factories will soon have no choice but to bring on new people.

Indeed, a possible labor shortage is emerging in key industries, suggesting that a boost in hiring and higher wages could soon be coming.

In the latest Federal Reserve Beige Book survey of economic conditions, industries citing a labor shortage include construction, information technology/software development, manufacturing, transportation, engineering, professional services and energy. Combined, these areas represent nearly 34 million employees, or roughly 25 percent of the total workforce.

This can also been seen in the way the number of short-term unemployed -- a metric that many economists believe shows labor market utilization better than the overall employment rate -- recently dropped to a level not seen since the mid-1970s.

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That's a sign that employers will soon have no choice but to dip into the pool of long-term unemployed and provide the skills training needed to get them up to speed. That pool, shown above, remains quite extended. But it's coming down fast.

Reintegrating disenfranchised workers, and finally providing a boost to middle-class wages, is the turnaround most of America has been waiting for. Sure, stocks are pushing to record highs. Corporate profitability is at heights never before seen. Yet, until we see a turnaround on these employment measures, the recovery won't be complete.

Thankfully, it looks like we could be on the cusp of exactly that.

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