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Many commentators tend to focus on the
usual subjects -- weekless jobless claims, headline unemployment
rate, monthly changes in nonfarm payrolls -- when describing the state
of the labor market.
But as we've seen in other cases, the
numbers that don't
attract as much attention from the media and the financial markets, including
those that result from slicing and dicing the subcomponents of the
aforementioned series, often tell a different story than the highlighted
data.
In fact, here are excerpts from three
reports that seem to refute the notion that a jobs recovery is imminent. In
fact, they suggest to me, at least, that the structural weakness in the labor
market predated and will likely last far longer than the crisis and
subsequent recession:
"A Decade of Labor Market Pain" (Mandel on Innovation and
Growth)
In February 2001, nonfarm payrolls hit
their business cycle peak of 132.5 million. Ten years later, the latest
data pegs February 2011 payrolls at 130.5 million, a 1.5% decline. To put
this in perspective, the ten-year period of the Great Depression, 1929-39 saw
a 2.3% decline in nonfarm employment, roughly the same magnitude.
But even that 1.5% understates the
extent of the pain for most of the workforce. I divide the economy into two
parts. On the one side are the combined public and quasi-public sectors, and
on the other side is the rest of the economy. Public, of course, refers to
government employees. ‘Quasi-public’, a term I just
invented, includes the nominal private-sector education, healthcare, and
social assistance industries. I call them ’quasi-public’ because
these industries depend very heavily on government funding. For
example, social assistance includes ‘child and youth services’
and ‘services for the elderly and disabled’, which are often
provided under government contract.
The chart below shows employment growth
in the public/quasi-public sector, compared to employment growth in the rest
of the economy, with February 2001 set to 100. We can see that
public/quasi-public employment rose steadily over the past ten years, and is
now up 16%. By comparison, the rest of the private sector is down 8% in
jobs over the past 10 years.
"Hidden Workforce Challenges Domestic
Economic Recovery" (Washington Post)
Overshadowing the nation’s
economic recovery is not only the number of Americans who have lost their
jobs, but also those who have stopped looking for new ones.
These workers are not counted in the
Labor Department’s monthly unemployment rate, yet they say they are
willing to work. Since the recession began, their numbers have grown by 30 percent,
to more than 6.4 million, amounting to a hidden labor
force that could stymie the turnaround.
Adding these workers to
February’s jobless rate pushes it up to 10.5 percent, well above the more
commonly cited 8.9 percent rate.An even broader measure of
unemployment, which includes people forced to work part time, stands at
nearly 16 percent.
Economists say the longer these workers
stay out of the job market, the harder it will be for them to find
employment, creating a vicious circle that can spiral for months or longer.
Meanwhile, their delayed entry into the job market means smaller paychecks in
the future. And if these ranks remain high, economists worry that it will
signal a much deeper and more troubling problem for the country:
Workers’ skills don’t match the jobs available.
“It can be a self-reinforcing
problem, where it just gets worse over time,” said Burt Barnow, an
economist and professor at George Washington University.
'No JOLTS to Complacency" (The Conscience of a
Liberal)
From the JOLTS (job offerings and labor
turnover) data:
Although unemployment remains very
high, at this point that’s mainly due to lack of hiring; layoffs are
quite low. This means that people who still have decent jobs aren’t
feeling much at risk of losing them. So any urgency would have to come from
concern about those who don’t have jobs — those who lost them in
the slump, and of course young people trying to get started on their working
lives.
And those people — at least one
in six workers, judging by U6 — don’t seem to have much political
or psychological visibility. In effect, they’re being written off
Michael
J. Panzner
Editor, Financialarmageddon.com
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