Jobs Picture for May 8th, 2009

Male unemployment reaches 10% as private sector employment craters

by Heidi Shierholz with research assistance from Kathryn Edwards and Andrew Green

April marked the 16th month of the current recession, matching the longest since the Great Depression. The April 2009 employment data released this morning by the Bureau of Labor Statistics showed that while the pace of job loss is exhibiting signs of slowing—losing 539,000 in April compared to an average of 707,000 per month in the first quarter—today’s labor market is still shedding jobs at a breathtaking pace. Furthermore, the small pockets of growth in the labor market in April were due to the hiring of temporary workers in preparation for the 2010 Census, as government employment increased by 72,000.The private sector, however, continued to crater. The private sector shed 611,000 jobs in April, along with an additional 69,000 private-sector jobs losses reported in revisions for March. The unemployment rate jumped up dramatically, from 8.5% to 8.9%, with male unemployment soaring to 10.0%.

Since the start of the recession, the economy as a whole has shed 5.7 million jobs, totaling 4.2% of total employment. But losses in the private sector alone have been much steeper, with a decline of 6.0 million jobs, or 5.2% of private employment. This rate of private-sector job loss was 50% faster than the 3.5% private employment loss over the 16 months of the 1981/82 recession.

Furthermore, over the last 16 months the population has continued to grow. To keep up with population growth, the economy must add approximately 127,000 jobs every month, which means 2 million jobs were needed just to match population growth. In other words, the economy is currently 7.8 million jobs below where it would need to be simply to maintain pre-recession employment rates.

The index of aggregate weekly hours is a measure of the total number of hours worked in the economy and is thus a more comprehensive measure than employment because it captures both job loss and reductions in hours for the workers who kept their jobs. This index continues to fall at a stunning pace, evidence of the economy’s continued contraction. It fell 0.6% in April (an annualized rate of 6.9%), and has fallen a total of 7.0% since the start of the recession. By comparison, it fell a total of 5.8% over the 16 months of the 1981/82 recession.

Job losses continue to occur throughout the economy—the diffusion index shows that 71.8% of industries experienced employment declines in April (a modest improvement from the first quarter, when an average of 78.9% of industries experienced job declines each month).

Manufacturing and construction continue to see the biggest losses. Manufacturing saw a decline of 149,000 jobs, for a total drop since December 2007 of 1.6 million, or 11.8% of that sector’s employment. Motor vehicles and parts continued to experience steep losses—29,100 jobs in April for a total of 281,000 since the start of the recession (29.4% of employment in that sector). Construction (residential and nonresidential) saw a decline of 110,000 jobs in April, for a total of 1.2 million jobs lost in this recession (15.6% of employment).

The service sector also continues to experience declines—private services (excluding government) were down 341,000 jobs in April, for a total decline since December 2007 of 3.2 million jobs (3.4% of its total). Retail trade was down 46,700 in April and 744,000 since December 2007 (4.8% of employment in that sector). Automobile dealers lost an additional 9,300 jobs in April, despite indications that auto sales have shown some signs of stabilizing.

The financial activities sector continued to shrink (down 40,000 jobs in April and 5.2% since December 2007). Professional and business services also saw large losses (down 122,000 jobs in April and 7.4% since December 2007). Within professional and business services, temporary help services continued to see the steepest declines, down 62,500 jobs in April and 31.9% since the start of the recession.

As has been the case throughout the recession, health care once again added jobs (up 16,700 in April and 3.3% since the start of the recession). Government employment increased dramatically in April by 72,000. Federal government employment made up almost all of the increase by adding 66,000 in April, mainly due to the hiring of temporary workers in preparation for the 2010 Census. State and local government employment remained essentially flat in April, increasing by 2,000 and 4,000, respectively, as declining revenues continued to put a strain on state and local government balance sheets.

Nominal (i.e., not inflation-adjusted) hourly wages have risen 3.2% over the last year, meaning that with price indices showing minimal growth, workers who remain employed are experiencing real wage increases. However, nominal hourly wage growth is slowing—in April it grew at an annual rate of 0.7%. Furthermore, due to reductions in hours, nominal weekly paychecks are growing more slowly: 1.3% over the last year, and only a 0.6% annualized growth rate in April.

The household survey also continues to present a bleak picture. In April, the unemployment rate rose from 8.5% to 8.9%, as 563,000 workers were added to the jobless rolls. There are now 13.7 million unemployed workers in this country, up 6.2 million from the start of the recession in December 2007. Since the start of the recession, the unemployment rate has increased by 4.0 percentage points, far surpassing the unemployment increase during the deep 1981/82 recession, when the unemployment rate increased by 3.6 percentage points.

The number of “marginally attached” workers remained essentially flat in April (dropped 4,000), but has increased from 1.3 million to 2.2 million since the start of the recession. These are workers who want a job, are available to work, but have not actively sought work in the last month (and so are not officially counted as among the unemployed). If these workers were counted as unemployed, the unemployment rate in April would have crossed into double digits at 10.1%.

The number of people who want full-time jobs but have had to settle for part-time work declined by 139,000 in April, but has nearly doubled over the course of the recession, from 4.6 million in December 2007 to 8.9 million in April. The “underemployment rate,” which includes not just unemployed workers but also marginally attached and involuntarily part-time workers, increased from 15.6% to 15.8%, so that now 24.8 million people—nearly one out of every six workers—are either unemployed or underemployed.

Data from the Job Openings and Labor Turnover Survey show that the number of openings in the economy declined by over 30% from December 2007 to February 2009. As a result of the dramatic increase in the number of job seekers and the stark decline in job openings, jobless workers are getting stuck in unemployment for long periods. In April, 27.2% of unemployed workers had been jobless for at least six months, the highest share since the Great Depression.

Since the start of the recession, all major demographic groups have experienced large increases in unemployment. However, there remain significant differences between groups. Largely due to their disproportionate concentration in the hard-hit sectors of manufacturing and construction, men have lost much more ground during this recession than women—April unemployment was 10.0% for males and 7.6% for females (up 5.0 and 2.8 percentage points since the start of the recession). In April, unemployment was 15.0% among black workers, 11.3% among Hispanic workers, and 8.0% among white workers (increases of 6.1, 5.1, and 3.6 percentage points, respect
ively, since the start of the recession). By education category, the data show that workers with lower levels of schooling face much higher unemployment rates. For those with a college degree, the unemployment rate is 4.4%, which though only half the average unemployment, is still higher than at any time dating back to at least 1979 (last data available). Unemployment among those with only a high school diploma is 9.3%, up 4.7 percentage points since the start of the recession. Workers with less job experience are also particularly hard hit in this economy. Workers age 16-24 face an unemployment rate of 16.7%, 25-54 year olds are seeing 7.8%, and those over 54 are at 6.4% (up 5.1, 3.8, and 3.3 percentage points, respectively, in this recession).

The April employment report shows that the labor market is still deteriorating quickly. While the Recovery Act was a very important step towards pulling the U.S. economy out of its nosedive, it was only ever expected to create or preserve between three and four million jobs. Even while it was being debated, the labor market deteriorated so quickly that it was down roughly twice that many jobs before the Act could even effect. Without substantial additional stimulus, the economy will likely reach double-digit unemployment by the end of the year.

The Economic Policy Institute JOBS PICTURE is published each month upon release of the Bureau of Labor Statistics’ Employment Situation report.