Employers Add Workers but Jobs Still Hard to Find

Congress Needs to Stay on Top of Job Creation and Extend Unemployment Benefits

October marks the 10th straight month of private sector job gains. The private sector added 159,000 jobs last month and a total of 1.1 million over the past year. These are the strongest jobs gains since April and they’re a good start to recovering the jobs lost in the recession. It will take time to get those jobs back but the right policies can help. Meanwhile, the unemployment rate remains stuck at 9.6 percent and another 254,000 workers dropped out of the labor force in October. This is an indication of the challenges that the unemployed continue to have finding work in this job market.

The Federal Reserve’s quantitative easing should help to keep interest rates low and boost exports. But the nearly 15 million unemployed—with 4 in 10 of those out of work and searching for a job for at least six months—continue to need access to long-term unemployment benefits, and spending remains our most important policy tool to encourage job creation. Congress, therefore, should act quickly this month to maintain benefits for the unemployed before they expire on November 30. And it should commit to this policy until the unemployment rate comes back down.

Employers report strong hiring in a number of sectors. Manufacturing, however, is now in its third month of job losses after adding jobs for the first seven months of 2010. Private service-producing industries added 154,000 jobs last month, with temporary help services adding 34,900 jobs in October, a faster pace than in any month over the past seven months. This is an encouraging sign because employers often hire temporary workers as demand picks up and hire permanent workers later on.

Also encouraging is that the pace of job creation in private service-producing industries is now looking faster than at a comparable point in the past two recoveries, 16 months after the recession’s end. Private service-producing industries added nearly 1.1 million jobs over the past year compared to 140,000 created in the year ending March 2003 and 689,000 in the year ending July 1992. These industries added nearly 2.8 million jobs in the year ending March 1984, however, so the pace is not on par with that recovery. This is important since the job losses in the early 1980s recessions are more similar to the Great Recession than were the job losses in the early 1990s or early 2000s recessions.

And even though employers cite stronger hiring in October this is not a glowing employment report. The Labor Department’s household survey shows that very serious challenges continue for those looking for work along with a great deal of frustration. The share of the U.S. population that is either employed or looking for a job fell to 64.5 percent in October, a low not seen since 1984. The share of the U.S. population with a job fell to 58.3 percent last month, only a tenth of a percent higher than in December 2009, which was the lowest since 1983.

Men continue to exit the labor force in recent months. Among adult men 73.8 percent were in the labor force—employed or actively seeking and available for employment—in October, the same as in January 2010 and the lowest since the Bureau of Labor Statistics began recording this data in 1948. This is down from 76.2 percent in early 2007.

There were 6.2 million workers out of work and actively seeking a job for 27 weeks or more in October—41.8 percent of all unemployed workers. Many have simply given up looking for work: There were 2.6 million people "marginally attached" to the labor force last month. These people are not actively seeking a job but are unemployed and available for work, and they had looked for a job sometime in the past year. Of these, 1.2 million reported that they were not actively looking for a job because they did not believe there were jobs available for them. But the number of workers who were employed part time because they could not find full-time work or their employer cut their hours fell by 318,000 in October.

There were slightly different employment trends by race last month, but we shouldn’t infer too much from one-month changes. The share of white workers with a job fell by 0.3 percentage points last month to 59.2 percent, falling by 0.4 percentage points for white adult men (to 67.7 percent) and 0.3 percentage points for white adult women (to 55.3 percent). Among African Americans, the share with a job actually rose last month by 0.7 percentage points to 52.4 percent, rising by 0.9 percentage points for African-American adult men (to 57.8 percent). For white adult women the share with a job went down 0.3 percentage points (to 55.2 percent). The share of the Hispanic population with a job fell by 0.6 percentage points to 58.6 percent.

Today’s data show positive job creation. Congress and the administration, however, should sit back and cross their fingers in hopes that they will not have to address the situation facing the nearly 15 million unemployed. Current policy is actually exacerbating the unemployment situation: The House had been ready, willing, and able to give more aid to the states, which would have forestalled greater state and local government job losses. But conservatives blocked those efforts and the legislation passed was insufficient to keep state and local government jobs from being lost. In October, local government shed another 7,000 jobs, for a total of 267,000 over the past year (and 102,000 over the past three months). These layoffs are adding to unemployment lines while reducing much-needed services for families hit hard by the recession.

October’s job numbers are a marked improvement but much work is still necessary to recreate the millions of jobs lost in the Great Recession. The Recovery Act was a good start, and according to the nonpartisan Congressional Budget Office it’s saved or created 1.4 million to 3.3 million jobs as of August. Still, the recovery has yet to reach all those seeking work. A continued focus on helping the unemployed and producing jobs must remain our goal.

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