Good News Amid Fragile Recovery

Hiring Resumes, But No Positive Signs Yet for the Long-Term Unemployed

There is positive news coming out of the Bureau of Labor Statistics today. The economy added 162,000 jobs in March and revised the data for January and February upward by 62,000 jobs. Most of these jobs—123,000—were created in the private sector. But these hiring gains still show a fragile recovery with 15 million Americans still unemployed.

The reality is that these positive gains are still quite modest, if encouraging. The economy has 8.2 million fewer jobs today than it did when the recession began in December 2007, and at this pace, it would take more than four years to regain the jobs lost and even longer to create enough jobs for our growing population. For comparison, the economy created an average of more than 200,000 jobs each month during the recoveries of the 1980s and 1990s.

The lost decade

And today’s news is not all positive. Those who are out of work continue to have an exceptionally challenging time finding a new job. The share of the long-term unemployed who have been out of work and pounding the pavement in search of a new job for at least six months is at a record-breaking 44.1 percent, or 6.5 million workers. The share of the unemployed who were long-term unemployed had never risen above 26.0 percent prior to this recession. But now the typical worker is taking 20 weeks to find a new job.

The problem of long-term unemployment is a particular challenge for those who have lost their job involuntarily. More than half of unemployed adult men and women (54.6 percent and 54.3 percent respectively) have been out of work for at least six months. Long-term unemployment is also more common among workers over age 45 compared to younger workers, and African-American workers compared to white workers.

This issue has special urgency since extended benefits for those who have been unemployed for at least six months will expire on Monday. We need the long-term unemployed to continue to receive benefits so that they can help themselves and their families while they job search, and also so they can help stabilize this nascent recovery.

Many of the long-term unemployed will need to train for different jobs than they had before, perhaps in a different part of the country. But there are high monetary and personal costs to going back to school and moving a family, and addressing these should be key issues on Congress’s agenda moving forward.

Still, today’s report signals a labor market that is growing stronger. The employment rate—the share of the population with a job—edged up in March to 58.6 percent. The increase occurred across demographic groups. African-American workers saw their employment rate tick up from a low of 51.9 in December 2009 to 52.2 percent last month, and Hispanic workers saw their employment rate rise from 58.5 to 59.4 over the same time period.

Yet workers are not seeing increases in their take-home pay after inflation. Average quarterly hourly wages grew at an annualized rate of 2.1 percent last month, but the Consumer Price Index for all Urban Consumers rose slightly more by 2.2 percent in the 12 months ending in February, which indicates that wages are not quite keeping up with inflation.

Now that we are at the end of the Great Recession, one stark fact stands out: Our economy has entirely lost the employment gains of the 2000s economic recovery. It’s as if the 2000s economic recovery never happened. The private sector employs fewer people today than it did at the end of 1998, but our economy has an additional 32 million people over the age of 16.

This means that the recovery we are in now must be a strong one, since we have a lot to make up for. The Local Jobs for America Act, introduced by Rep. George Miller (D-CA), would create approximately 1 million jobs by providing $100 billion in funds over two years to protect state and local government jobs and create local government and nonprofit sector jobs.

Government employment has trended downward since summer of 2009

Maintaining a focus on job creation in the private sector and government remains an important goal. State and local governments have been shedding employment, pro-cyclically adding to their local unemployment problems. The federal government added 48,000 jobs last month, many in temporary jobs to conduct the U.S. Census, while state and local government shed another 9,000 jobs. The new census jobs are clearly boosting employment and will help increase spending over the next few months, even if they are not permanent jobs.

Congress and the administration must continue to focus on paving the way for a stronger economic future. We can now see that the American Recovery and Reinvestment Act clearly boosted employment in the short run, but long challenges remain. This month’s modest job gains are a start and we must encourage stronger employment gains moving forward.

Heather Boushey is a Senior Economist at the Center for American Progress.