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Job Crisis Not Abating

August Numbers Highlight What Must Be the No. 1 Job of Congress

August’s employment data released today paints a grim picture. Employers added no jobs in August. And downward revisions of 58,000 jobs for June and July mean that the pace of job creation over the past three months has been a paltry 35,000 jobs. Unemployment remains at 9.1 percent, the 26th month of unemployment at or above 9.0 percent. Wages are falling sharply relative to inflation, and there are no indications in the surveys that employers intend to ramp up hiring anytime soon as both temporary hiring and employees’ hours were essentially flat.

Today’s data should be a wake-up call to responsible members of Congress that cutting deficits right now is a job-killing strategy. Today’s outcome is the result of poor policy choices and the misguided focus on short-term deficits by Tea Party conservatives who are holding Congress hostage to their radical-right agenda. Congress should not try to imitate the kinds of austerity policies being pursued in Europe but rather focus on boosting employment.

Key elements of a job-creating agenda should be infrastructure investments, reducing layoffs by keeping workers in their jobs in key sectors such as education, and ensuring benefits are available to the unemployed while they search for jobs.

Employment is growing at a markedly slower pace than the first quarter of 2011 when employers added an average of more than 165,000 jobs per month and relative to prior economic recoveries. At this point in the early 1980s economic recovery, employers were adding an average of 245,000 jobs per month, while at this point in the early 1990s recovery, employers were adding an average of 174,000 jobs per month.

Hiring was weak across industries. The information technology and communications industry reported 48,000 fewer jobs last month, nearly all of which can be accounted for by the Verizon strike. Manufacturing hiring, which had shown strong and steady growth in early 2011, ground to a halt in August. Like employment trends overall, manufacturing hiring over the past three months has been paltry, adding only 16,000 jobs per month on average, compared to 36,000 per month in early 2011.

Today’s report provides no indication that employers intend to ramp up hiring anytime soon as both temporary hiring and employees’ hours were flat. For all workers, average hours of work fell from 34.3 to 34.2. While a one-month change is not necessarily a trend, at this point in the recovery we need to see solid increases in hours to indicate that employers are seeing the kind of rising demand that will boost employment in the months to come. Temporary help added 4,700 jobs in August, which is better than nothing, but not even close to the pace of last fall, when between October 2010 and December 2010, 32,000 jobs were added each month on average.

private-sector change

As a result of weak job growth, it continues to be the case that the share of adult men with a job is at lows not seen since the Great Depression. The share of men aged 20 and over with a job was 66.8 percent in August, only a tenth of a percent above the all-time low hit in July. For women, the share with a job was 54.9 percent, just a tenth of a percent higher than June’s 25-year low.

While the ugly labor market affects all workers, the toll weighs most heavily on the less educated, workers of color, and women-headed households. White workers have an unemployment rate of 8.0 percent, while African Americans have an unemployment rate that is more than double that level, at 16.7 percent. Hispanic unemployment is 11.3 percent. Workers without a high school diploma have an unemployment rate of 14.3 percent, more than three times as high as among those with a college degree, who have an unemployment rate of 4.3 percent. Women who maintain families have an unemployment rate of 11.9 percent.

Even among those with a job, the poor economy is taking its toll. Hourly wages fell by 3 cents in August. The quarterly annualized rate of growth of wages was 2.2 percent, compared to the Consumer Price Index for All Urban Consumers, which has risen by 3.6 percent for the past year.

A particularly ugly labor market trend is that workers who’ve lost their jobs continue to have an exceptionally difficult time returning to a job. The share of the unemployed who are long-term unemployed remains at near-record highs, with 42.9 percent of the unemployed having been out of work and searching for a job for at least six months. This share has been above 40 percent since December 2009.

Data from the Bureau of Labor Statistics on job turnover shows that while layoffs have abated, hiring has yet to ramp up, indicating that there is greater calcification in the job market. If you have a job, you’re in the in-crowd, but if you’re out of work, it’s hard to get back in.

There is also evidence that employers are discriminating against the long-term unemployed. Rep. Rosa DeLauro (D-CT) and Sen. Richard Blumenthal (D-CT) have introduced bills in both houses of Congress—the Fair Employment Opportunity Act—that would make discrimination based on employment status illegal.

Both President Obama and Congress are focusing on jobs. The continued labor market weakness points to a clear need for interventions that boost hiring. The wrong policy is to continue layoffs at the state and local level. State and local governments have been actively adding to the unemployment problem, shedding 666,000 workers since their peak in September 2008. Helping them avoid more layoffs, especially in important investments such as education, should be at the top of the agenda.

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