By Heidi Shierholz with research assistance from Alexander Hertel
This morning’s release by the Bureau of Labor Statistics of the February employment report showed that the unemployment rate increased sharply to 8.1% in February, its highest rate in over 25 years. In February, the economy shed 651,000 payroll jobs, for a total of 4.4 million lost so far in the 14 months of this recession. For the last four months, the economy has shed an average of 646,000 jobs per month.
The chart shows percentage employment declines since the start of the current recession and for each of the previous three downturns. Employment has declined 3.2 percentage points so far this downturn, compared to 1.6 percentage points in the first 14 months of the 2001 downturn, 1.4 percentage points in 1990, and 2.6 percentage points in the 1981 downturn.
The household survey in depth
The jobless rolls swelled by 851,000 in February, and there are now 12.5 million unemployed workers in this country—5 million more than at the start of the recession in December 2007, and the largest number of unemployed workers in the 61-year history of the series.
The employment-to-population ratio—simply the percent of the population that is employed—declined to 60.3% in February, for a total decline of 3.1 percentage points since its pre-recession peak of 63.4% in December 2006. The decline in the employment-to-population ratio this recession now exceeds the total decline of 3.0 percentage points experienced during the deep downturn of the 1980s.
The underemployment rate (technically known as the U-6 measure of labor underutilization) is a more-comprehensive measure of labor market slack than unemployment because it includes people working part time who want full-time jobs. This measure jumped up dramatically from 13.9% in January to 14.8% in February. As a result, more than one in seven workers in this country—an estimated 23.1 million people—was either unemployed or underemployed in February. Since the start of the recession, the number of involuntary part-time workers has increased by 4 million, from 4.6 million to 8.6 million.
Long-term unemployment—the share of the unemployed who have been without a job for more than six months—also remained high at 23.1%, which is unsurprising given that there are currently over 4 unemployed workers for every job opening.
The overall unemployment rate masks large differences in unemployment among racial and ethnic subgroups. These differences, significant even in good economic times, are greatly exacerbated during recessions. In February, black workers had an unemployment rate of 13.4% (an increase of 4.5 percentage points since the start of the recession), followed by Hispanic workers at 10.9% (an increase of 4.7 percentage points), and white workers at 7.3% (an increase of 2.9 percentage points). There are also large differences in unemployment by education category, as workers with lower levels of schooling face higher unemployment rates. For those with a college degree, the unemployment rate is 4.1%, while those with only a high school diploma face an unemployment rate of 8.3%. Considering only workers with a college degree, racial and ethnic minorities still face higher unemployment rates: the rate for white college-educated workers is 3.8%, for blacks it is 6.8%, and for Hispanics it is 5.3% (note that seasonally adjusted values for unemployment are not available by education for racial and ethnic subgroups, so these numbers are not seasonally adjusted).
The establishment survey in depth
Since the start of the recession in December 2007, the economy has shed 4.4 million jobs according to the payroll survey, and that number actually understates the problem because in order to simply keep up with population growth, the country would have needed to have added an estimated 127,000 jobs every month over this period, for a total gain of 1.8 million jobs. In other words, the economy is currently approximately 6.2 million jobs below where it would need to be simply to have maintained pre-recession rates of employment for the country’s workforce.
The weakness in the labor market is being felt across industries—the diffusion index shows that 76.2% of industries lost jobs in February. The steepest declines, however, continue to be found in construction and manufacturing. Construction lost 104,000 jobs in February, for a total decline of 12.0% (904,000 jobs) since the start of the recession in December 2007, and manufacturing lost 168,000 jobs in February, for a total decline this recession of 9.4% (1.3 million jobs). Within manufacturing, fabricated metal products (-27,500) and machinery (-25,300) saw the biggest declines in February.
Job losses are also being felt in the service sector, with private services (excluding government) down 384,000 jobs in February and 2.6% since the start of the recession. Retail trade was down 39,500 in February and 3.9 % since the start of the recession, with continued large losses in motor vehicle and parts dealers (-13,300). Transportation and warehousing was down 48,900 jobs in February, with truck transportation experiencing the largest losses (33,400 jobs). Accommodation and food services also experienced significant declines, down 32,000 jobs last month.
There were continued losses in the financial activities sector (-44,000 jobs), and in professional and business services (-180,000). Within professional and business services, the largest losses continue to be felt in temporary help services, down 77,700 jobs in February and 26.5% since the start of the recession.
Health care continued to add jobs (up 26,900). Employment in the federal government was unchanged in February, while state governments saw a decline of 3,000 jobs, and local governments added 12,000 jobs.
The index of aggregate weekly hours worked fell 0.7% in February, and dropped by an 8.6% annual rate over the last five months—a huge decline in the total number of hours worked and an indication of the extent of the economy’s contraction.
Nominal wages (that is, wages not adjusted for inflation) continue to rise—at a rate of 3.6% over the last year. With price indices showing minimal or negative growth, workers who keep their jobs are experiencing real wage growth. However, weekly paychecks have seen smaller overall increases—2.1% over the last year—as hours are cut back.
The February employment report shows that the labor market has been deteriorating for 14 straight months, and the losses continue at a stunning pace. While the stimulus package will help to reduce the extent of jobs loss, it is not large enough to fully offset the decline. Working families are in for a very long haul.