Economic Indicators | Jobs and Unemployment

Middling job growth in November

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Contrary to expectations that Hurricane Sandy would have a large negative impact, the Bureau of Labor Statistics found that the storm did not substantively affect the November jobs report released this morning. The 146,000 jobs added in November therefore represent a clear underlying trend of middling job growth, in line with the average job growth of the prior three months of 154,000. This kind of growth is enough for the economy to hold its ground, but does not allow for a substantive reduction in the unemployment rate. (As a case in point, the drop in the unemployment rate to 7.7 percent in November was not due to unemployed workers finding work. Rather, it was due to workers dropping out of the labor force.) At this rate of job growth, it will take more than 10 years to return to the prerecession unemployment rate. The November data provide a clear reminder that mass joblessness remains the real and present economic danger this country faces.

MORE: State of Working America graphs with latest national employment and unemployment data

Severe recession followed by slow recovery means we still have a major long-term unemployment crisis

This country has 4.8 million workers who have been unemployed for more than six months, four times as many as the 1.2 million average in 2007. The share of unemployed workers who have been unemployed for more than six months declined to 40.1 percent in November, but it is still far above the highest levels in any of the last three recessions, as the figure shows. The large number of long-term unemployed is unsurprising given that there have been three or more unemployed workers for every job opening for more than four years.

Labor force participation drops again

The labor force participation rate (the share of the working-age population that is either employed or actively seeking work) dropped two-tenths of a percentage point to 63.6 percent in November, nearly back down to its low of the downturn of 63.5 percent in August. The labor force participation rate of “prime-age” workers—those age 25–54—also dropped substantially, from 81.6 percent to 81.1 percent. This is also its lowest rate of the downturn. (It is useful to look at labor force trends excluding young people and people nearing retirement age, as this removes the longer-run structural trends of retiring baby boomers and increased college enrollment of young people and therefore provides a cleaner read of the impact that changes in job opportunities are having on labor force participation.) These drops in labor force participation show we are not yet seeing job growth strong enough to start drawing the pool of “missing workers”—workers who dropped out of, or never entered, the labor market due to weak job opportunities—back into the labor market. By my estimates, the size of the “missing” workforce is around 3.9 million.

Industry breakdowns

Public-sector job losses continue to drag on the recovery; the public sector declined by 1,000 jobs in November. Since the labor market began adding jobs in February 2010, the private sector has gained more than 5 million jobs, but the public sector has lost more than half a million.

Retail trade always has many seasonal workers on its payrolls in October, November, and December. However, because the fourth quarter hiring surge in retail happens every year (along with the subsequent loss of those workers in January), it is not reflected in the widely reported “seasonally adjusted” data, which attempt to capture underlying trends by excluding seasonal factors. On a seasonally adjusted basis, retail trade added 52,600 jobs in November. However, this number may be inflated due to the fact that Thanksgiving was very early this year, meaning there was an additional post-Thanksgiving week in November. Thus, some holiday hiring will likely have occurred in November that otherwise would have occurred in December. Next month’s retail data will shed more light on whether the seasonal adjustment models captured this shift.

Health care added 20,000 jobs in November, a slight decline from its average growth of 28,700 in the prior three months. Temporary help services added 18,000 jobs, which was good news after the average growth rate of 2,200 over the prior three months. Despite relatively strong growth in the recovery, employment in temporary help services is still below its 2006 levels. Restaurants and bars added 8,600 jobs in November, down from the industry’s 29,400 average gain of the prior three months.

In November, construction decreased by 20,000 jobs, a substantial drop from the average growth rate of 5,700 over the prior three months. Manufacturing declined by 7,000 jobs in November, in line with its average loss of 6,300 per month over the prior three months.

Hours flat, wages see modest increase

The length of the average workweek held steady at 34.4 hours. Persistent high unemployment continues to exert strong downward pressure on wages; average hourly wages for all private-sector workers increased by four cents in November, bringing the annualized growth rate of the last three months to 1.9 percent, a substantial decline from the prerecession rate of wage growth.

Demographic breakdowns

  • Unemployment in November was 8.1 percent for those age 25 and older with a high school degree but no additional education, and 3.8 percent for those age 25 and older with a college degree or more. Among workers younger than age 25 who are not enrolled in school, unemployment over the last 12 months averaged 20.3 percent for those with a high school degree but no additional education and 7.9 percent for those with a college degree or more (annual averages are used here since seasonally adjusted data are not available for workers under age 25 by education). These numbers show that young workers have been particularly hard-hit by unemployment. The numbers also show that workers with higher levels of education have lower unemployment. However, workers at all levels of education have seen their unemployment rates roughly double since 2007. This shows that our persistently high unemployment does not stem from workers lacking the proper skills, since demand has dropped for workers at all levels of education.
  • Racial and ethnic minorities continue to be hit particularly hard by unemployment. Unemployment in November was 13.2 percent for African American workers, 10.0 percent for Hispanic workers, and 6.8 percent for white workers (up 4.2, 3.7, and 2.4 percentage points, respectively, since the start of the recession).
  • Men saw a much larger increase in unemployment than women did during the recession, but have seen stronger improvements in the recovery. The unemployment rate reached its prerecession low in late 2006 and early 2007, at 4.4 percent for men and 4.3 percent for women. Male unemployment peaked at 11.2 percent in November 2009 and has since fallen to 7.9 percent. Female unemployment continued to rise for about another year, peaking at 9.0 percent in November 2010, and has since fallen to 7.6 percent. 

Conclusion

The length and severity of the Great Recession, combined with the modest job growth in its aftermath, means that we face an ongoing crisis of long-term unemployment. At the end of this year, federally funded extended unemployment insurance (UI) benefits are set to expire. If they aren’t renewed, 2 million workers receiving federal unemployment benefits will be immediately cut off, and that number rises to 5 million if you take into account all of 2013. Renewing the federally funded unemployment insurance benefit extensions through the end of 2013 (when the unemployment rate is still expected to be well over 7 percent) would not only extend a lifeline to the families of millions of long-term unemployed workers, it would also generate spending that would support around 400,000 jobs. If this program is discontinued, the economy will lose these jobs. For more details, see the recent EPI report Labor market will lose 400,000 jobs in 2013 if UI extensions expire.

— Research assistance was provided by Nick Finio, Natalie Sabadish, and Hilary Wething.


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