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PORTSIDELABOR  July 2011, Week 2

PORTSIDELABOR July 2011, Week 2

Subject:

Labor market in full retreat

From:

Portside Labor <[log in to unmask]>

Reply-To:

[log in to unmask]

Date:

Fri, 8 Jul 2011 21:22:22 -0400

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (240 lines)

Labor market in full retreat 

Heidi Shierholz 

July 8, 2011

http://www.epi.org/publications/entry/7272/

Economic Policy Institute


This morning's release of the June 2011 Employment
Situation report by the Bureau of Labor Statistics
showed a labor market in retreat.  Virtually every
single measure was weak:  only 18,000 payroll jobs were
added, nominal wages fell, unemployment was up in almost
all age groups, more than 250,000 workers dropped out of
the labor force altogether, and the public sector
continued to bleed jobs.  Furthermore, a downward
revision to last month's data means that this is the
second month in a row with job growth at 25,000 or less.
This is a remarkable, across-the-board backslide.

Of particular concern is that measures we look to for
signs of future growth - average hours and temporary
help employment - both declined.  Average hours declined
by one-tenth of an hour to 34.3, and temporary help lost
12,000 jobs, its third straight month of declines.
Somewhat ironically, this report marks the two-year
anniversary of the "official" end of the Great Recession
(June 2009) and it is the weakest report since the
recovery began.  The unemployment rate increased to 9.2%
in June 2011, and has been at 8.8% or above for the
entire recovery thus far.   By comparison, the highest
the unemployment rate ever reached in the two recessions
prior to the Great Recession was 7.8% (for one month,
June 1992).

One of the most useful measures in capturing the broad
nature of the recovery so far is the
employment-to-population ratio, which is simply the
share of the working-age population that has a job. This
measure declined in June to 58.2%, matching its lowest
point of the downturn so far.  As the accompanying chart
shows, from the start of the recession in December 2007,
through the 18 months of the recession itself, passed
the official end of the recession in the summer of 2009
and through the end of 2009, the labor market continued
to deteriorate significantly.   At the end of 2009, the
labor market stopped its decline, but since then it has
simply held steady.  (The recent EPI papers Ten Facts
About the Recovery and Historically Deep Job Loss, but
not an Unusual Recovery go into further depth in
assessing the recovery so far.)

Long-term unemployment still near record high

The share of unemployed workers who have been unemployed
for more than six months  was one thing that improved in
June, from 45.1% to 44.4%.  However, that improvement
was due entirely to a large influx of newer unemployed
workers, not a decline in the long-term unemployed.  The
number of workers who have been unemployed for more than
six months increased by 89,000 to 6.3 million.

Earnings and Industry breakdowns

With persistent high unemployment, wage growth is
extremely low.  Average hourly wages were relatively
flat in June (down by 1 cent), and have grown at a 1.8%
annualized rate over the last three months and 1.9% over
the last year, far below the growth rate in the period
before the recession started.   With the decline in
average hours and the lack of hourly wage growth, weekly
earnings dropped by an annualized rate of 3.9% in June.

No sectors showed robust growth.  The public sector
again displayed the ongoing drag of state and local
budget problems, with state government employment losing
7,000 jobs and local government employment dropping by
18,000.  Since the end of the recession two years ago,
the public sector has shed nearly half a million jobs,
while the private sector has added one million jobs.  In
other words, nearly 50% of the private sector jobs gains
in this recovery have been canceled out by job losses in
the public sector.

The private sector added 57,000 jobs in June. Of these
gains, 53,000 were in private service-providing
industries and 4,000 were in goods-producing industries.
Manufacturing gained just 6,000 jobs, while construction
dropped 9,000 in June.  Temporary help services jobs
dropped by 12,000, the third straight month of declines,
not a promising sign for future hiring.  Leisure and
hospitality was one bright spot, adding 34,000, though
some of that was likely positive rebound from an
uncharacteristic drop in May.  Employment in retail
trade increased by just 5,000 in June, and some of that
also may have been positive rebound after a surprising
drop of 4,000 in May.  Financial services shed 15,000
jobs after adding 7,000 on average in the prior three
months.  Health care added 14,000 jobs, a drop from the
27,000 jobs it added, on average, in the prior three
months.

The labor force and unemployment

The labor force participation rate declined to 64.1% in
June, a new low for the downturn, as 272,000 workers
dropped out of the labor force.  The labor force is 1.3
million workers smaller than it was at the end of the
recession, although the working-age population has
continued to grow in that time.  Consequently, the
proportion of the population that is in the labor force
is now 1.6 percentage points below where it was when the
recession ended in June 2009. If the labor force
participation rate had held steady over the last two
years, there would be roughly 3.9 million more workers
in the labor force right now.  Instead, they are on the
sidelines. If these workers were in the labor force and
were counted among the unemployed, the unemployment rate
would be 11.4% right now instead of 9.2%.

Underemployment

The underemployment rate (i.e., the U-6 measure of labor
underutilization) is a more comprehensive measure of
labor market slack than the unemployment rate because it
includes not just the officially unemployed but also
jobless workers who have given up looking for work and
people who want full-time jobs but have had to settle
for part-time work. This measure increased in June from
15.8% to 16.2%, due in large part to a nearly
half-a-million increase in the number of "marginally
attached" workers (workers who want a job, are available
to work, but have stopped actively seeking work). In
June there were a total of 25.3 million workers who were
either unemployed or underemployed.

Demographic breakdowns

All major groups of workers have experienced substantial
increases in unemployment over the Great Recession and
its aftermath. However, some segments have gotten hit
particularly hard: young workers, workers with lower
levels of schooling, racial and ethnic minorities, men,
and workers with disabilities.

* In June, unemployment was 17.3% among workers age
16-24, 8.2% among workers age 25-54, and 7% among
workers age 55+ (up 5.6, 4.1, and 3.8 percentage points,
respectively, since the start of the recession in
December 2007).

* Among workers younger than age 25 who are not enrolled
in school, unemployment over the last year averaged
21.5% for those with a high school degree, and 9.6% for
those with a college degree (reflecting increases of 9.5
and 4.2 percentage points, respectively, since 2007).

* Among workers age 25 or older, unemployment in June
was 10% for those with a high school education and 4.4%
for those with a college degree (up 5.3 and 2.3
percentage points, respectively, since the start of the
recession).

* Unemployment in June was 16.2% for African American
workers, 11.6% for Hispanic workers, and 8.1% for
non-Hispanic white workers (up 7.2, 5.3, and 3.7
percentage points, respectively, since the start of the
recession). * Unemployment was 9.7% for men, compared
with 8.6% for women (up 4.6 and 3.7 percentage points,
respectively, since the start of the recession).

* Workers with a disability had an unemployment rate of
16.9% in June, compared with 9.0% for workers without a
disability (up 7.6 and 3.4 percentage points,
respectively, since June 2008). (Data on labor market
outcomes by disability status are not seasonally
adjusted and are only available back to June 2008.)

Conclusion

The labor market is currently 7 million payroll jobs
below where it was at the official start of the
recession three and a half years ago, and this number
hugely understates the size of the gap in the labor
market by failing to take into account the fact that
simply keeping up with the growth in the working-age
population would have required the addition of 4.1
million jobs since the recession started in December
2007. This means the labor market is now 11.1 million
jobs below the level needed to restore the prerecession
unemployment rate (5.0% in December 2007, the official
start of the recession).   It has been three and a half
years since the start of the recession in December 2007.
To get back to the pre-recession unemployment rate by
December 2014, another three and a half years from now,
we would need to add more than 350,000 jobs every single
month between now and then.   We added only 43,000 jobs
in the last two months combined.

Given this situation, it must be our top priority to do
everything we can to stimulate demand and generate jobs,
including providing fiscal relief to states; expanding
the safety net (which, by getting money into the hands
of people who will spend it, stimulates demand and
generates jobs); approving additional spending on
infrastructure; implementing direct job creation
programs in particularly hard-hit communities;
supporting work-sharing to avoid layoffs; having the
Federal Reserve do more quantitative easing and/or
target a somewhat higher inflation rate (e.g., 3-4%) to
both reduce real interest rates and erode debt; and
lowering the price of the dollar to boost net exports.
The president and Congressional leaders need to stop
talking about deficit reduction and start talking about
job creation.

--Kathryn Edwards, Nicholas Finio, and Hilary Wething
provided research assistance.  

____________________________________________

PortsideLabor aims to provide material of interest to
people on the left that will help them to interpret the
world and to change it.

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