The job market is still on a long road to full recovery, but it took a big step in January.
U.S. nonfarm payrolls grew by 243,000 jobs in January, the Bureau of Labor Statistics reported on Friday, up from a revised 203,000 jobs in December.
The unemployment rate declined to 8.3 percent in January, from 8.5 percent in December. But if workers who have dropped out of the labor force were included, some economists estimate, the unemployment could be higher than 10 percent.
"This report is encouraging, but it still underscores how far a distance we have to go and how many people are still long-term unemployed and disconnected from the workforce," said Harvard economist Lawrence Katz. "Even if we were willing to say that the scars of the great recession mean a couple of million people drop out permanently, we still have many years to go before we get back to where we were."
Still, the headline numbers were far better than market expectations for payroll growth of about 155,000 jobs and an unemployment rate of 8.5 percent. The Dow Jones Industrial Average rose 107 points in early trading, while the Nasdaq rose 28 points and the S&P 500 rose about 2 points.
The job growth is indeed good news for the economy, the labor market -- and for President Barack Obama's reelection chances.
Still, some perspective is in order: Total nonfarm payroll employment now stands at 132.4 million jobs, after some benchmark revisions, or about 5.6 million jobs lower than the 138 million at the peak in January 2008. In other words, it will take many more months of this sort of job growth just to get employment back to where it was four years ago.
A recent study by Washington, D.C. consulting firm Hamilton Place Strategies estimates that there may be three million long-term unemployed people who are currently not being counted by the Labor Department because they have simply given up looking for work. Signs of an improving job market might bring them back to the labor force, which would push the unemployment rate higher.
In fact, the labor force participation rate fell to 63.7 percent in January from 64 percent in December, the lowest since January 1982, suggesting workers are still leaving the labor force.
A group of workers the Bureau of Labor Statistics labels "not in the labor force" -- because they have not looked for work in more than a month -- but who currently want a job, has risen by 1.66 million since the recession began. However, this number is lower than some economists' estimates. If those 1.66 million workers were added back to the civilian labor force, then the unemployment rate would jump to 9.2 percent.
Some economists have even higher estimates of how many workers who want jobs are not being counted. For example, if the three million workers Hamilton Place Strategies estimates are out of the labor force were added back in, then that would theoretically push the jobless rate up to 10.9 percent.
By way of comparison, unemployment peaked at 10 percent in October 2009. A broad measure of unemployment, which includes workers only marginally attached to the labor force, fell to 15.1 percent, the lowest since February of 2009.
The private sector added 257,000 jobs in January, while the government sector cut 14,000. The biggest job-creating sectors were manufacturing, which added 50,000 jobs, and "leisure and hospitality" services, which added 44,000 jobs. The average private-sector work week held steady at 34.5 hours, while average hourly wages rose to $23.29 from $23.25.
America's Jobs Deficit, and Why It's Still More Important Than the Budget Deficit
http://www.huffingtonpost.com/robert-reich/americas-jobs-deficit-and_b_1253099.html?utm_source=Alert-blogger&utm_medium=email&utm_campaign=Email%2BNotificationsThe most significant aspect of January's jobs report is political. The fact that America's labor market continues to improve is good news for the White House. But as a practical matter the improvement is less significant for the American work force.
President Obama's only chance for rebutting Republican claims that he's responsible for a bad economy is to point to a positive trend. Voters respond to economic trends as much as they respond to absolute levels of economic activity. Under ordinary circumstances January's unemployment rate of 8.3 percent would be terrible. But compared to September's 9.1 percent, it looks quite good. And the trend line -- 9 percent in October, 8.6 percent in November, 8.5 percent in December, and now 8.3 percent -- is enough to make Democrats gleeful.
But the U.S. labor market is far from healthy. America's job deficit is still mammoth. Our working-age population has grown by nearly 10 million since the recession officially began in December 2007 but many of these people never entered the workforce. Millions of others are still too discouraged to look for work.
The most direct way of measuring the jobs deficit is to look at the share of the working-age population in jobs. Before the recession, 63.3 percent of working-age Americans had jobs. That employment-to-population ratio reached a low last summer of 58.2 percent. Now it's 58.5 percent. That's better than it was, but not by much. The trend line here isn't quite as encouraging.
Given how many people have lost their jobs and how much larger the total working-age population is now, we've got a long road ahead. At January's rate of job gains -- 243,000 -- the nation wouldn't return to full employment for another seven years.
When they're not blaming Obama for a bad economy, Republicans are decrying the federal budget deficit and demanding more cuts. But America's jobs deficit continues to be a much larger problem than the budget deficit.
In fact, we can't possibly achieve the growth needed to reduce the budget deficit as a proportion of the total economy unless far more people are employed. Workers are consumers, and consumer spending is 70 percent of economic activity. And cutting the budget means fewer workers, directly (as government continues to shed workers) and indirectly (as government contractors have to lay off workers) and therefore fewer consumers.
Yet deficit hawks continue to circle. State and local budgets are still being slashed. The federal government is scheduled to begin major spending cuts less than a year from now. Republicans are calling for more cuts in the short term. Austerity economics continues to gain traction.
Meanwhile Congress is debating whether to renew extended unemployment benefits. This should be a no-brainer. The long-term unemployed, who have been jobless for more than six months, comprise a growing share of the unemployed. (In January they rose from 42.5 percent to 42.9 percent).
Republicans say unemployment benefits are prolonging unemployment, that people won't get jobs if they get unemployment checks from the government. That's claptrap, especially when there's only 1 job opening for every 4 people who need a job. Republicans also say we can't afford to extend jobless benefits. Also untrue. Jobless workers spend whatever money they get, and their spending keeps other people in jobs.
Government should extend unemployment benefits, and not cut spending until the nation's rate of unemployment is down to 5 percent. Then, and only then, should we move toward budget austerity.
The job situation is better than it was but it's still awful. The jobs deficit is still our number one economic problem. Forget the budget deficit until we tame it.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
No comments:
Post a Comment