Jobs Growth Continues in April, but Congress Needs to Help Make Sure It Lasts
More Budget Cutting Is Sure to Kill Momentum
SOURCE: AP/Mark Lennihan
The economy continues to move in the right direction. It added 115,000 jobs in April, and data for February and March were revised upward by a total of 53,000 jobs. April marks the 26th straight month of gains in private-sector employment, for a total of 4.2 million private-sector jobs. This month’s growth is not as strong compared to the previous two months, however, and Congress will need to focus on ways to keep up demand—austerity isn’t the answer. Congress also needs to set its sights on making sure today’s college students and graduates can afford a good education and can find good jobs once they’ve earned a degree.
There are two factors that contribute to the slower pace of job gains in April compared to February and March. First, because of the unseasonably warm weather this winter, some hiring occurred earlier in the year than what typically happens, so this month’s slow growth is a reaction to higher-than-usual hiring in the past couple of months.
Second, conservatives in Congress have consistently blocked policies that would have ramped up job creation and economic growth. This past fall conservatives in Congress refused to vote on the American Jobs Act, which would have bolstered job creation, and instead have focused on austerity. Even as workers continue to face a tough labor market, government has continued to lay off employees, with 10,700 people laid off by local government education departments in April alone.
The good news in today’s report is that manufacturing firms continue to hire, adding 16,000 new jobs in April. This brings total new hires up to 489,000 since manufacturing’s low point in January 2010. Average hours worked by employees in the manufacturing sector continue to trend upward, surpassing the levels seen in the 2000s. This indicates that firms are seeing strong demand. (see Figure 1) Overtime hours among manufacturing workers have also trended up, though they remain slightly lower than in the 2000s economic recovery, and held steady at 4.2 hours per week last month.
Other areas of job gains in April include retail (added 29,000 jobs), food services and drinking places (20,000 jobs), and health care (19,000 jobs). The temporary help sector added 21,100 jobs, much of which is a recovery from the loss of 9,400 jobs in March. But that’s still positive growth overall and an improvement from the trend in the late spring of 2011.
In April the unemployment rate fell from 8.2 percent to 8.1 percent, though the change was not statistically significant. This decrease, however, was due to people leaving the labor force, rather than because they found jobs. As a result of labor force exits, the labor force participation rate fell two-tenths of a percent to 63.6 percent, a low not seen since 1981.
The drop in participation in the labor force also looks different for men and women. In April the share of adult men (aged 20 and older) participating in the U.S. labor force dropped to an historic low of 72.9 percent, going back to rates last seen in 1948. There are only 39,000 fewer adult men in the labor force now than there were in December 2007 when the recession began, but the population has grown by 4.2 million. The labor force participation rate for adult women held at 59.3 percent, the lowest prior to this recession since 1995.
There are further differences by gender among African American workers. African American women have seen their employment rate—that is, the percent of all African American adult women with a job—rise by 0.7 percent to 56.1 percent, while African American adult men saw their employment rate fall from 58.9 percent to 58.1 percent.
Long-term unemployment is a persistent problem. The share of the unemployed who are long-term unemployed—having been out of work and searching for a new job for at least six months—remains elevated. In April 41.3 percent of the unemployed were long-term unemployed. More than 40 percent of the unemployed have been long-term unemployed for 29 months. Prior to this recession that share had never jumped above 26 percent (in June 1983).
Workers saw their average hourly earnings rise by 0.1 cents last month, but the gains are not keeping pace with inflation. In April wages grew at an annual rate of 1.8 percent, below the 2.7 percent rate of inflation as measured by the Consumer Price Index.
In the bigger scheme the U.S. economy continues to face headwinds. The United Kingdom is back in a recession, and the Eurozone appears headed there as well. The slower-than-hoped-for U.S. economic growth in the first quarter, combined with today’s report, should set off a warning sign to policymakers that they need to focus on ways to support and boost demand, not add to layoffs.
In particular, there is strong empirical evidence that recessions can leave lasting scars, especially on young people who graduate into an economy without opportunity. Yet instead of working to ameliorate this, policymakers continue to inflict pain on students.
For many of this spring’s graduates, this may not be a celebratory season. Jobs are scarce, and for those who are working, many are seeing very low wages or are working in occupations that require less education than grads have. This spring’s high school graduating classes are looking at a labor market where a quarter (24.5 percent) of their peers are currently unemployed and actively searching for a job.
Right now Congress is considering actions that would only create more challenges for high school graduates. If Congress does not act, the third of students who will most likely take out federally subsidized college loans will face a much higher interest rate than those that took out loans this year. Given that the labor market is likely to remain challenging for young Americans, now is not the time to raise the cost of attending college or to make life post-graduation more difficult for the classes of 2013 and beyond.
Heather Boushey is a Senior Economist at the Center for American Progress.
- The Cost of College Will Soar if Interest Rates Allowed to Double by Jennifer Mishory, Rory O’Sullivan, and Tobin van Ostern
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