Employment Hits New Low

New employment numbers show declining opportunities for Americans, and particularly African Americans, says David Madland.

New numbers released today by the Bureau of Labor Statistics show that employment fell by 17,000 jobs in January, 2008. Employment growth has been relatively low for several years, but this month’s figures marked the first time since August 2003 that the economy actually lost jobs. January’s employment figures are the latest sign of a weakening economy and indicate that 2008 will be a tough year for workers.

Just as significantly, employment figures were revised downward for the previous year; the economy created 280,000 fewer jobs in 2007 than had been previously estimated. According to the new numbers, the economy added a meager 1.1 million jobs in 2007, and job growth was less than one percent. By contrast, the economy in the late 1990s was adding 3 million jobs per year and job growth was over 2.5 percent. Even in 2006, a relatively weak year for employment, job growth was 1.6 percent and the economy added 2.1 million jobs—over a million more jobs than were added in 2007.

New unemployment figures for January also show worrisome results. Unemployment fell slightly in January to 4.9 percent from 5.0, which suggests that fewer people are actively looking for work because of the poor state of the economy. The average length a person remained unemployed increased to 17.5 weeks, up nearly a week since December 2007. And average weekly earnings fell by $0.42 in seasonally adjusted terms during the same period.

Job losses continued to hit sectors including construction and manufacturing, which have seen steady declines, but losses also hit areas such as professional and business services and government that had been creating jobs.

Driven by the declining housing market, construction shrunk by 27,000 jobs in January, with most of the job losses coming from residential building and residential specialty trade contractors. The new 2007 estimates also revised construction numbers, with a total loss of 278,000 jobs between January 2007 and January 2008. Manufacturing continued to constrict, losing 28,000 jobs for the month and 269,000 since January 2007. State government cut 24,000 jobs in January and professional and business services lost 11,000 jobs.

As has been the trend for some time, health care and restaurants experienced job growth, but job increases in these sectors were not enough to overset the overall weakness in the labor market.

Minorities often have a tougher time in a weak job marker, and that has especially been the case this month and over the past year for African Americans. In January, the unemployment rate for African Americans increased to 9.2 percent from 9.0 percent in December 2007, while the unemployment rate for whites held steady at 4.4 percent. The unemployment rate for African Americans grew by an astonishing 15 percent between January 2006 and January 2007, from 8.0 to 9.2 percent, while for whites the unemployment rate dropped from 4.6 in January 2006 to 4.4.

In a similarly troubling snapshot, the employment to population ratio—the percentage of the civilian population that is employed— declined by 2.2 percent for African Americans between January 2006 and January 2007, from 59.5 to 58.2 percent. In comparison, the employment to population ratio for whites actually increased to 63.5 percent in January 2008 from 63.4 percent in December 2007.

Today’s employment figures, when combined with other economic indicators such as reports this week showing very low GDP growth and record foreclosures, indicate a broad-based slowdown for the U.S. economy.

Policymakers need to find ways to generate greater economic growth that benefits workers with increases in the number of well-paid, high-quality jobs. The proposed stimulus package being discussed in Congress is a start, but what is really needed is an economic recovery plan to first stabilize the housing market and then create the conditions for widely shared prosperity, such as those proposed in Progressive Growth.

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David Madland

Senior Fellow; Senior Adviser, American Worker Project

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