Economic Indicators | Jobs and Unemployment

Groundhog Day in the labor market

The labor market started out 2013 in a lackluster fashion, adding 157,000 jobs in January, according to the jobs report released this morning by the Bureau of Labor Statistics. This is certainly not the rapid pace of job creation necessary to drive down unemployment. It’s as if we’re in Bill Murray’s “Groundhog Day”: Each month we wake up to the same report, with all the indicators—employment, unemployment, labor force participation, hours, wages—painting the same picture.

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

Prior months’ payroll data were revised to incorporate not just the routine monthly revision of earlier data, but also the annual benchmark revision and new seasonal adjustment factors. These revisions have made the recovery appear slightly stronger—between February 2010 (the low point of employment) and the end of 2012, the data now show we added 5.3 million jobs, as opposed to the 4.8 million reported prior to the revisions. The revised data show that job growth averaged 175,000 per month in 2011 and 181,000 per month in 2012.

Additionally, the revisions show more public-sector job loss than was previously reported. Since the recovery began in June 2009, the data now show the public sector has lost 721,000 jobs (with roughly half of that, 354,000, in local public education, which is basically public K–12 education). Public-sector job loss continues, with a loss of 9,000 government jobs in January.

Furthermore, despite the overall growth in jobs over the last three years, we still have a crisis-level jobs deficit. The U.S. labor market started 2013 with fewer jobs than it had 7 years ago in January 2006, even though the potential workforce has since grown by more than 8 million. The jobs deficit is so large that at January’s growth rate, it would take until 2021 to return to the prerecession unemployment rate.

Unemployment remains elevated across the board 

The beginning of the year is a useful moment to assess job-finding prospects today relative to before the recession started. The following table shows the current unemployment rate and the unemployment rate in 2007, along with the ratio of those two values, for various demographic groups. While there is substantial variation in unemployment rates across groups, in every group the unemployment rate is between 1.5 and 1.9 times as high now as it was in 2007. Notably, the unemployment rate of workers with a college degree is substantially higher today than before the recession. This underscores that unemployment is high today not because workers lack adequate education, but because a lack of demand for goods and services makes it unnecessary for employers to significantly ramp up hiring. For additional evidence demonstrating that the reason unemployment remains so high is a broad-based lack of demand for workers, not that today’s job seekers aren’t suitable for the jobs that are available, see the Economic Snapshots here, here, and here (the last two show unemployment by industry and occupation, respectively).

Unemployment rates for various demographic groups, 2007 and today

2007 Jan. 2013 Ratio
All 4.6 7.9 1.7
Male 4.7 8 1.7
Female 4.5 7.8 1.7
White 4.1 7 1.7
Black 8.3 13.8 1.7
Hispanic 5.6 9.7 1.7
16–24 10.5 16.8 1.6
25–54 3.7 6.7 1.8
55+ 3.1 6 1.9
Workers age 25 and older
Less than high school 7.1 12 1.7
High school 4.4 8.1 1.8
Some college 3.6 7 1.9
Bachelor’s and advanced degree 2.0 3.7 1.9
Workers age 25 and under, not enrolled in further schooling
High school degree 12.0 20.3* 1.7
Bachelor’s and advanced degree 5.4 8.0* 1.5

* This is the average of the last 12 months. The monthly values for this series are not seasonally adjusted.

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

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Long-term unemployment

The share of unemployed workers who have been jobless for more than six months was 38.1 percent in January. This is an improvement from one year ago, when the share was 43.0 percent. However, given that job opportunities have not increased significantly over the last year, that improvement is likely due to people exhausting unemployment insurance benefits. (Research shows unemployment insurance extensions have kept people in the labor market looking for work. Conversely, if individuals are no longer required to look for work to receive benefits because their benefits have run out, they may simply give up the job search—which means they are not counted among the unemployed.) Furthermore, by way of comparison, six years ago in January 2007 the long-term unemployed share was 16.3 percent, less than half as high as today’s. The fact that we still have large numbers of long-term unemployed is unsurprising given that the ratio of unemployed workers to job openings has been 3-to-1 or greater since September 2008.

Hours flat and wages up modestly

The length of the average workweek was unchanged in January at 34.4 hours, still below the December 2007 level of 34.6. Average hourly wages increased by 4 cents in January, and 2.1 percent over the last year. This remains far below the prerecession growth rate, as persistent high unemployment has exerted strong downward pressure on wage growth. Average weekly wages grew by $1.37 in January, and 1.9 percent over the last year.

Industry breakdowns

Construction added 28,000 jobs in January and a total of nearly 100,000 jobs in the last four months combined. This could be due in part to restoration after Hurricane Sandy and to unusually warm winter weather, but is likely also due to an increase in housing construction. Manufacturing increased by only 4,000 jobs, lower than its average monthly growth rate of 12,400 in 2012.

Retail trade added 32,600 jobs and was one of the big gainers in the report, but the January figure was a decline from its average monthly increase of 44,300 in the fourth quarter of 2012. Similarly, health care added 22,800, but this was a decline from its average increase of 33,700 in the fourth quarter. Furthermore, temporary help services lost 8,100 after gaining an average of 14,900 per month in the fourth quarter. Restaurants and bars added 17,100, only slightly down from the fourth-quarter average of 21,300 jobs added per month.

— Research assistance by Nick Finio and Hilary Wething

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