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Jobs Returning, Slowly

Unemployment Rate Falls Below 9 Percent

SOURCE: AP/Julie Jacobson

Tera Burbank, who has been unemployed for over two years, shops for groceries on February 9, 2011 in Las Vegas.

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Slowly but surely the jobs picture across our nation is improving, though not at the speed needed to bring the economy back to full employment quickly. The latest jobs figures released by the federal government for February show that the economy added 192,000 new jobs, helping to drive the unemployment rate down to 8.9 percent.

The share of the population in the labor force, however, stood at 64.2 percent that month, the lowest since 1984, reflecting that there are many workers on the sidelines, not even seeking employment, who are likely to seek work once the job market improves. Still, this is the first time the unemployment rate fell below 9 percent since April, 2009.

This month’s report from the U.S. Bureau of Labor Statistics has some bright spots, but it remains the case that the pace of job growth is too slow. At the pace of job gains over the past quarter, it will take until 2033 to get our economy back to 5 percent unemployment.

Indeed, the employment recovery is still fragile, which is why economists are concerned that the federal budget passed by the House of Representatives for fiscal year 2011, which ends September 30, will lower economic growth and lead to job losses. The House Republican bill not only strips the budget of necessary investments that support the long-term competitiveness and productivity of the American economy, but also irresponsibly threatens to derail the recovery, which has yet to move beyond too-tepid job gains.

Make no mistake: Cutting necessary investments in our human capital, our infrastructure, and the next generation of scientific and technological advances—as is now being debated on Capitol Hill—will only exacerbate the weakness in the labor market both in the short run and long run.

What the February numbers tell us

The economic recovery is affecting male and female workers differently. Over the past year, 224,000 adult women have dropped out of the labor force, while 227,000 adult men have joined the labor force. Over 2008 and 2009, men lost a disproportionate share of the jobs lost, and as a result, the share of men with a job fell to a post-World War II low of 66.4 percent in December 2009. Since then, the share of adult men with a job has inched up 0.7 percentage points to 67.1 percent, while the share of adult women with a job fell to 55.2 percent in February, where it had been in November and December 2010, a low not previously seen since 1993.

The gender disparity over the course of the recovery can be seen in the chart below. Since the economic recovery began, as defined by the National Bureau of Economic Research to be June 2009, private-sector employers have hired 503,000 men, while 141,000 women have lost their job. Over the economic recovery so far, men have seen especially strong job gains in professional and business services, adding 425,000 jobs, while women added only 115,000, and in many industries, men have gained jobs while women have lost jobs, although there are some notable exceptions, such as construction, where men have lost 408,000 jobs and women have lost 86,000 jobs.

 

There are encouraging signs of manufacturing employment returning, however, the pace of job gains remains relatively tepid. Manufacturing added 33,000 jobs in February, for a total of 195,000 since its low point 14 months ago in December 2009. While impressive compared to the early 2000s economic recovery in which manufacturing never regained the jobs lost during the recession, this is a slower pace of job gains than occurred over a comparable time period in the 1990s’ economic recovery, when manufacturing added nearly twice as many jobs. From the early 1990s recession low in July 1993 through the next 14 months, 373,000 manufacturing jobs were added.

In February, construction added jobs for the first time since August 2010, increasing employment by 33,000. Yet this may partially be attributable to the sharp job losses reported in January, which was hit by heavy snow storms. The temporary-help sector added 15,500 jobs in February, after shedding 4,900 in January. This is certainly an improvement over job losses, but the pace remains slower than in 2010, when the sector added an average of nearly 26,000 jobs each month.

State and local government layoffs are weighing down job growth as these governments have shed 241,000 jobs over the past year. Local governments have shed 377,000 since their most recent peak employment in September 2008. Much of the job losses in local government have been among women. Since the recession ended in June 2009, women have lost 273,000 local government jobs, while men have lost 47,000. But men have borne the brunt of state lay-offs, losing 73,000 state government jobs over the recovery, while women added 41,000.

The household survey continues to show that finding a job remains challenging, but there are signs of improvement. The share of those who have been out of work and seeking a job for at least six months remained at a near-record high of 43.9 percent in February. At the same time, the share of those unemployed and seeking a job for less than five weeks was 17.5 percent in February, smaller than at any time since 1948 when this data series began. This indicates that fewer of the unemployed just lost a job, but that the composition of the unemployed remains tilted strongly toward the long-term unemployed.

Furthermore, the share of the unemployed who are “job losers”—rather than those who voluntarily quit or who are new or returning entrants to the labor force—fell in February. This category of unemployed is down to 59.9 percent from 63.1 percent a year ago.

What’s more, high unemployment continues to take its toll on the wages of those with a job. Overall, wages grew by a quarterly annual rate of 1.6 percent last month, just keeping pace with the level of inflation, as the Consumer Price Index for all urban consumers was 1.6 percent from January 2010 to January 2011.

Heather Boushey is an economist at the Center for American Progress.

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