October 3, 2003
Payrolls up 57,000, but unemployment unchanged
Faster growth in the third quarter helped drive the nation’s payrolls up for their first gain in eight months, according to today’s report from the Bureau of Labor Statistics (BLS). Payrolls were up 57,000, driven by manufacturing’s smallest decline in more than a year and gains in service employment. Yet the labor market remains weak, as unemployment was unchanged at 6.1% last month and the number of long-term unemployed (i.e., those who have been without jobs for at least six months) rose to the highest level in over a decade. The current level of job growth remains well below what is needed to lower the jobless rate.
The increase in payrolls reflects a 29,000 decline in manufacturing that was more than offset by hires in services. The manufacturing loss was the smallest since July of last year, though it is not clear that this represents a reversal of trend. Thus far this year, factory jobs are down by 464,000 compared to 510,000 over the same period last year. Clearly, this remains a beleaguered sector.
Business services posted a 66,000 job gain, its best month since before the recession began, but half of these jobs came from hires in temporary help. This is the fifth month of consecutive gains in temp work, suggesting that businesses continue to test the waters without committing to permanent hires. Retailers added jobs for the second month in a row (11,000 jobs over the past two months), possibly reflecting greater buying related to tax cuts that some consumers began receiving this summer as well as accelerated mortgage refinancing by homeowners. However, employment in this sector remains down by 182,000 since November 2001, the official start of the current recovery.
Another important signal regarding the impact of policy on job growth is the decline of 44,000 in education employment at the local level. This is the largest one-month loss since July 1982, suggesting state fiscal difficulties are leading to significant education cuts.
Payrolls are down 2.7 million since the recession began in March 2001 and one million over the recovery. However, today’s report shows that BLS’s preliminary estimate of its annual adjustment to the payroll survey is -145,000. If this value is not substantially revised, the BLS will adjust the payroll survey to show that 145,000 fewer jobs existed in March 2003 (these jobs will be incrementally added to the survey between April 2002 and March 2003), suggesting the jobless recovery is slightly deeper than was previously recognized.
The lack of available jobs prevented the unemployment rate from falling and led to a sharp jump in the number of long-term unemployed: those without jobs for at least six months accounted for 23.2% of the jobless, up from 21.8% in August. The last time the share of long-term unemployed surpassed this level was 20 years ago, in September 1983, when the overall unemployment rate was 9.2%. Another indicator of weak labor demand is last month’s 526,000 jump in the number of part-time workers who would prefer full-time jobs. These underemployed persons now account for 3.6% of the employed, up from 2.4% when the recession began (and up from 3.2% at the recession’s end).
Labor market weakness is also evident in the historically low share of the population employed, which fell to 62% in September, the lowest level since July 1993. Since the recession, employment rates are down by 2.3 percentage points, compared to 1.4 points over a similar period (30 months out from the start of recession) in the early 1990s business cycle.
African Americans are clearly feeling the brunt of the weak recovery. Since the recovery began, total unemployment is up by 0.5 points, with white unemployment increasing by 0.3 points and Hispanic unemployment rising 0.2 points. Black unemployment, which rose 0.3 points last month, is up 1.4 points since November 2001; unemployment among black males is up 2.2 points to12.3%. That said, the current weakness is broad-based, as shown in the slight uptick in the unemployment rate of college graduates to 3.2%, the highest level for this group in over a decade.
The persistence of these trends has led to slower wage growth, and the hourly wages of production and nonsupervisory workers fell very slightly in September (-$0.01), the first such decline since May 1989. Since weekly hours were unchanged, this decline in hourly wages led to a small fall in weekly earnings as well. Measured on an annual basis, hourly wages were up 2.7%, compared to an average of 3.2% from January to August this year.
The accelerated pace of growth in the third quarter of this year helped payrolls turn positive in September, for the first time since January. However, in order to absorb the growing labor force, our economy needs to generate 170,000 jobs per month. Thus, the level of economic activity remains too low to nudge the unemployment rate down. To the contrary, the share of the population at work fell last month to a 10-year low, and long-term unemployment rose to a 20-year high. Thus, while there are some signs of improvement, our labor market is not yet out of the woods.
—Jared Bernstein
with research assistance by Yulia Fungard and Sujan Vasavada
For more information on September job and wage data, go to EPI’s new web feature JobWatch.org.
The Economic Policy Institute JOBS PICTURE is published each month upon release of the Bureau of Labor Statistics’ employment report.
EPI offers same-day analysis of income, price, employment, and other economic data released by U.S. government agencies. For more information, contact EPI at 202-775-8810.
