Economic Indicators | Jobs and Unemployment

Labor Market’s Performance Is Uninspiring


 Press release

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The jobs report released this morning by the Bureau of Labor Statistics showed the labor market gained just 148,000 jobs in September, fewer than the average monthly gain of 185,000 jobs over the last year. We are making very little headway in returning the labor market to full health. The jobs gap—the number of jobs needed to restore prerecession labor market health—is still over 8 million. At the current rate of job growth, a return to a healthy labor market remains years away.

The 389,000 teacher gap

In September, public-sector employment increased by 22,000. However, over the last five years, it has declined by 657,000. With kids heading back to the classroom this fall, it’s worth considering how much of that drop has hit public schools. Around 40 percent of the decline in public-sector employment over the last five years was in local government education, which is largely jobs in public K–12 education (the majority of which are teachers, but also teacher aides, librarians, guidance counselors, administrators, support staff, etc.). To keep up with growth in the student population alone (from Table 1 here), employment in local public education should have increased by 132,000 jobs. As shown in the figure below—which adds the jobs lost to the jobs that should have been added to keep up with the expanding student population—the total jobs gap in local public education as a result of the Great Recession and its aftermath is nearly 400,000. (For more on the teacher gap, see this post.)

Unemployment is elevated across the board

The table below shows the current unemployment rate and the unemployment rate in 2007, along with the ratio of those two values, for various demographic and occupational categories. There is substantial variation in unemployment rates across groups (note, for example, that this was true in 2007, before the recession began). A key message from this table is that the unemployment rate is between 1.4 and 1.9 times as high now as it was six years ago for all groups. Today’s sustained high unemployment relative to 2007 across all age, education, occupation, gender, and racial and ethnic groups underscores that the jobs crisis stems from a broad-based lack of demand. In particular, unemployment is not high because workers lack adequate education or skills; rather, the lack of demand for goods and services makes it unnecessary for employers to significantly ramp up hiring. If anything, this fact is further reinforced by the increase this month in the unemployment ratio among bachelor’s and advanced degree holders and the decrease in the ratio among those with less than a high school degree.

Jobs Day Jobs Day (continued)

Unemployment rates of various demographic groups, 2007 and today

2007 September 2013 Ratio
All 4.6 7.2 1.6
Male 4.7 7.7 1.6
Female 4.5 6.7 1.5
White 4.1 6.3 1.5
Black 8.3 12.9 1.6
Hispanic 5.6 9.0 1.6
Age 16–24 10.5 15.2 1.4
Age 25–54 3.7 6.2 1.7
Age 55+ 3.1 5.3 1.7
Workers age 25 and older
Less than high school 7.1 10.3 1.5
High school 4.4 7.6 1.7
Some college 3.6 6.0 1.7
Bachelor’s and advanced degree 2.0 3.7 1.9
Workers under age 25, not enrolled in further schooling
High school degree 12.0 19.4* 1.6
Bachelor’s and advanced degree 5.4 8.3* 1.5
Occupation
Management, professional, and related occupations 2.1 3.8* 1.8
Service occupations 5.9 8.9* 1.5
Sales and office occupations 4.3 7.3* 1.7
Construction and extraction occupations 7.6 13.1* 1.7
Installation, maintenance, and repair occupations 3.4 5.6* 1.7
Production, transportation, and material moving occupations 5.8 9.2* 1.6

* This is a 12-month average (October 2012–September 2013), since this series is not seasonally adjusted.

Source: Author's analysis of the Current Population Survey public data series

Long-term unemployment improves slightly

The share of unemployed workers who have been unemployed for more than six months fell from 37.9 percent in August to 36.9 percent in September. However, it is still far higher than prerecession levels (in 2007 the share averaged 17.5 percent; today we are at more than double that rate). The long-term unemployed share has, however, improved from its peak of 45.3 percent in the spring of 2011. Given the lack of significant improvement in job opportunities over this period, this decrease in long-term unemployment over the last two-plus years is likely in part due to the scaling back of unemployment insurance benefits. This is because the requirement to look for work in order to maintain benefits kept some long-term unemployed actively seeking work and therefore counted as unemployed. It’s important to note that scaling back benefits did not help them get a job. Rather, the scaling back of benefits likely resulted in many non-employed potential workers becoming classified as not in the labor force rather than unemployed.

Missing workers

While the unemployment rate fell slightly from 7.3 percent in August to 7.2 percent in September, it continues to drastically understate the weakness of job opportunities. This is due to the existence of a large pool of “missing workers”—potential workers who, because of weak job opportunities, are neither employed nor actively seeking a job. In other words, these are people who would be either working or looking for work if job opportunities were significantly stronger. Because jobless workers are only counted as unemployed if they are actively seeking work, these missing workers are not reflected in the unemployment rate. According to our new metric on missing workers, there were over 5 million missing workers in September, and if the unemployment rate included missing workers, it would be 10.2 percent, not the 7.2 percent cited in today’s report.

— With research assistance from Alyssa Davis, William Kimball, and Hilary Wething. While I am the sole author of this report, the soul and 90 percent of the intellectual property resides with Heidi Shierholz. Any errors are mine.


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