Job Growth Remains Insufficient

Millions of Americans Still Need a Job

Today's job growth is an improvement, writes Heather Boushey in The Wall Street Journal. But there is a large backlog of workers waiting in the unemployment queue.

A "We're Hiring!" sign is shown at an Office Depot in Mountain View, California, on April 25, 2011. (AP/Paul Sakuma)
A "We're Hiring!" sign is shown at an Office Depot in Mountain View, California, on April 25, 2011. (AP/Paul Sakuma)

This was originally published on The Wall Street Journal‘s "Marketwatch."

Following on the heels of last week’s lackluster economic growth in the first quarter of 2011, today’s employment report from the Department of Labor provides some hopeful signs.

On the one hand, the Labor Department’s survey of employers shows they have added an average of 233,000 jobs per month for the past three months, more than double the rate of the prior three months. Yet, on the other hand, their survey of households shows a less-than-rosy picture, which should give policy makers pause. The unemployment rate rose to 9 percent in April as more people reported being unemployed and fewer reported being employed. Read MarketWatch’s full report on payrolls rising by 244,000 in April.

The upshot: Today’s job growth is an improvement, but there is a large backlog of workers waiting in the unemployment queue as well as millions who have given up searching, but still want to work.

We need to see job growth break above 300,000 a month and stay at that level for many months before the unemployment rate will begin to come back down. Today’s report provides a number of data points that point toward caution in interpreting the data positively in anticipation of that level of jobs growth returning anytime soon.

The average hours worked for production and nonsupervisory employees was 33.6 hours per week in April, the same as in March. This remains below the 2000s recovery peak of 33.9 hours per week, and far below the late 1990s peak of 34.6 hours per week. At the same time, employers shed 2,300 temporary workers, which either means they are hiring permanent employees or they are no longer seeing an increase in demand.

Another concern is that state and local cutbacks continue to drag down the labor market. Government employers shed 24,000 jobs in April, with 14,000 of those lost at the local level. These cut-backs are hitting women especially hard: Women have lost nearly two-thirds of all the 404,000 jobs lost in government over the past year.

A bright spot in today’s report is that manufacturing added 29,000 jobs in April, the sixth straight month of job gains. Manufacturing has added 250,000 jobs since its low point in December 2009, and among manufacturing production and nonsupervisory workers, hours per week are 41.4—just below the level in March but higher than at any point in the 2000s economic recovery. A key factor in sustained growth in manufacturing jobs is the increasingly competitive dollar, which helps U.S. exports. Goods exports grew by an annualized rate of 7.8 percent in the first quarter of 2011.

Civil engineering construction added 12,700 jobs in April, much of which continues to be due to projects begun with the American Recovery and Reinvestment Act of 2009. These jobs typically imply large multipliers, which bodes well for future job growth in sectors supplying inputs.

The recovery continues to create jobs for men, but not women. Since the recession officially ended in June 2009, men have added 746,000 jobs, while women have actually lost 211,000 jobs. Much of the difference by gender is due to the fact that women are more likely to be employed by state and local governments, which are engaged in significant layoffs in the wake of the nationwide budget crunch. But women also are losing jobs across most private industries. Since the recession ended, men have gained 152,000 retail and 15,000 finance jobs, while women have lost 154,000 retail and 152,000 finance jobs.

Typically, high unemployment is associated with lower wages, all else being equal. As unemployment remains high, wage growth is stalled, meaning that not just those out of work but also those with a job are feeling serious pain due to the Great Recession. Over the past year, wages grew by 2.1 percent, while the rate of inflation, a measured by the consumer price index for all urban consumers, rose by 2.7 percent.

The share of workers who are long-term unemployed; that is, out of work and searching for a job for at least six months, has hovered above 40 percent for 17 months — highs not seen since the Bureau of Labor Statistics began tracking this data in 1948. In April, the share of long-term unemployed fell to 43.4, which would ordinarily be seen as a positive indictor of a tightening labor market. But April also saw increases in workers who are newly unemployed. The number of unemployed workers who have been out of work for less than five weeks rose by 242,000 in April.

Alongside this uptick in short-term unemployed, the number of workers applying for unemployment benefits has risen back above 400,000 per week, which is what economists typically consider “recession-level” applications. New claims for unemployment insurance rose to over 474,000 for the week ending May 1. After dipping below 400,000 in February and March, this movement upwards is an unwelcome sign.

Even as more workers are seeking unemployment benefits due to layoffs, six states have taken steps to either limit the availability of benefits or reduce the benefit level. Four states have allowed federally funded benefits for the long-term unemployed (“extended benefits”) to expire, and six states are on track to do so over the next couple of months unless their legislatures take action. This is the wrong policy agenda for today’s economy. Fixing the unemployment insurance system is imperative and that policy agenda should focus on making the system stronger, not weaker.

This was originally published on The Wall Street Journal‘s "Marketwatch."


Heather Boushey is a Senior Economist at American Progress.

See also:

The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.


Heather Boushey

Former Senior Fellow