December 4, 2021

Economix Blog: How One Month’s Jobless Fare a Month Later

Friday’s jobs report was good, but it’s worth remembering that people already unemployed are still having a terrible time finding work. This is particularly evident from the Labor Department’s flows data, which track the labor force status of individuals from one month to the next. Here’s a chart showing the flows for unemployed workers — that is, if a worker was unemployed last month, what is his or her labor status this month?

Source: Bureau of Labor Statistics, via Haver Analytics. The lines show worker flows from unemployment last month into each of the following statuses in the current month: unemployment, not in labor force, employment. Source: Bureau of Labor Statistics, via Haver Analytics. The lines show worker flows from unemployment last month into each of the following statuses in the current month: unemployment, not in labor force, employment.

As you can see, the most likely outcome for someone unemployed in May was to continue being unemployed in June. The second-most-likely outcome was to drop out of the labor force entirely — that is, stop looking for work. (That’s part of the reason that today’s labor force participation rate is so low, although the biggest flow into the “not in labor force” category still comes from people who are leaving jobs rather than giving up a fruitless job hunt.)

Finally, the third-most-likely outcome was to find a job. Over all, fewer than one in five people who were unemployed in May were employed in June.

Unemployed workers have been more likely to flow out of the labor force than into employment for almost the entire period beginning around December 2008 to the present. This was historically not the case; for the nearly 19 years spanning from February 1990 (when the data series began) to the end of 2008, jobless workers were almost always more likely to find a job than to give up or retire. There were only two months when this was not the case (March 2003 and December 2005).

In June, the number of people flowing from unemployment into employment (2,330,000) was almost as high as the the number flowing from unemployment out of the labor force (2,481,000), but not quite. Fingers crossed, maybe next month we’ll finally see those lines cross each other again.

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U.S. Added 175,000 Jobs in May; Jobless Rate Rises to 7.6%

Economists were relieved that the numbers weren’t worse, given a string of other disappointing data in recent weeks, but noted that recent job trends are nowhere close to bringing the country back to full employment. At the current pace of job growth, it would take nearly five years to get the economy back to the low unemployment rate it enjoyed when the recession officially began in December 2007.

“It’s a decent report, but it’s not by any means robust,” said Conrad DeQuadros, senior economist at RDQ Economics, a research firm. “It’s certainly not strong enough to get the Fed to make any significant changes at its meeting in June,” he said, referring to speculation that the Federal Reserve might consider pulling back on its monetary stimulus if the jobs numbers came in strong.

On the bright side, the unemployment rate rose for a good reason: more people joined the labor force, perhaps indicating that Americans who have been sitting on the sidelines feel that they finally have a chance at finding a job. Still, the labor force participation rate remains low by historical standards.

In a New York Times/CBS News poll conducted May 31 to June 4, nearly half of respondents – 46 percent — rated the job market in their area as very or fairly good, with a third saying that they think their local job markets will improve over the next year. The same poll found that 39 percent of respondents said that the condition of the economy was very or fairly good, the highest share saying this since President Obama took office and even since the recession began.

Despite signs of optimism from consumers, other indicators of the health of the job market have been mixed. Average weekly hours and average hourly earnings, for example, have shown little improvement in recent months, according to the Labor Department.

Job gains in May were concentrated in service sectors like professional and business services, retail, and food services and drinking places. That last category has added 337,000 jobs over the past year.

The federal government, on the other hand, lost 14,000 jobs in May, presumably a result of the across-the-board spending cuts, known as the sequester, implemented by Congress in March.

Over the last three months, the federal government has shed 45,000 jobs, not including the furloughs that many federal employees are being placed on. The Pentagon, for example, has said that it would furlough 680,000 civilian workers starting in early July, with most workers losing about one paid day a week.

Though difficult to measure, the sequester probably has had effects in the private sector, both because government contractors are laying off workers and because laid off or furloughed government and contract workers have had less money to spend at their local businesses.

In addition to causing layoffs, the sequester could also be affecting those who already have lost their jobs by trimming social safety net services like Meals on Wheels and job training programs. As of May, there were 11.8 million people unemployed, 4.4 million of whom had been pounding the pavement for at least six months.

Almost every state has cut its unemployment insurance benefits as a result of the sequester, according to the National Employment Law Project, a labor-oriented research and advocacy organization. Some states, like Florida and Maine, are cutting the weeks for which jobless workers will continue receiving benefits, and others, like Illinois, are reducing the size of the weekly benefit checks (in Illinois, the cut was 16.8 percent). Some states, like Washington and Idaho, are also laying off employees who work in the labor agencies that help workers apply for benefits and find jobs.

North Carolina is ending its federally funded extended unemployment benefits on July 1 because reductions in its state benefits left it ineligible for the federal money.

“I’m having a hard time finding somebody who will give a 50-year-old with a few health problems a chance,” said Dwayne Fields of Goldsboro, N.C.

He was let go from his warehouse manager job of 12 years last October for “poor job performance” after he told his boss about some health problems, including a diagnosis of cardiomyopathy, hypertension and sleep apnea. He said he has since gotten treatment that has put him back into good working shape, but no one responds to his job applications. And his $212 weekly jobless benefit checks are about to end.

“I’m probably too old to flip burgers and deliver pizzas,” he said. “But if worse comes to worst I’ll do it. I’ve got an old lady and a 11-year-old kid to support.”

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U.S. Adds Only 88,000 Jobs; Jobless Rate Falls to 7.6%

The nation’s employers increased their payrolls by 88,000 last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since last June and less than half of what economists expected.

It was also the third consecutive spring in which employers tapered off their hiring, even after adjusting the numbers for seasonal changes. Economists have started calling the phenomenon the “spring swoon.”

“The general tenor of the report underscores what our overall data have been indicating – a growing but not accelerating economy,” said Steve Blitz, director and chief economist at ITG Investment Research.

The unemployment rate, which comes from a different survey, ticked down to 7.6 percent from 7.7 percent, but primarily because more people dropped out of the labor force, not because more people got jobs.

The labor force participation rate has not been this low — 63.3 percent — since 1979, a time when women were less likely to be working. Baby Boomer retirements may account for part of the slide, but discouragement about job prospects in a mediocre economy still seems to be playing a large role, economists say.

“The drop in the participation rate has been centered on younger workers,” said Joshua Shapiro, chief economist at MFR Inc., “many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”

Stock market indexes were down sharply at the start of Friday’s trading.

Still, as always, economists cautioned not to read too much into one month’s report, since the numbers will inevitably be revised.

“Remember that we’ve had a pattern of upward revisions,” said John Ryding, the chief economist at RDQ Economics, noting that the government on Friday revised January and February’s net growth upward by a total of 61,000 jobs.

“Before we read too much into it, bear in mind we have at least two more cracks of the whip before the number is really finalized,” he added.

March’s job gains were concentrated in professional and business services and health care, while the government again shed workers, as it has been doing for most of the last four years. Economists expect more government layoffs in the months ahead as the effects of Congress’s across-the-board budget cuts make their way through the system. This so-called “sequestration” process does not seem to have appreciably affected the numbers in March though. Meanwhile, some policy makers have started to publicly address deficiencies in the quality of the jobs being created by the private sector, in addition to their quantity.

“It’s important to look at the types of jobs that are being created because those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery,” said Sarah Bloom Raskin, a member of the Federal Reserve Board, in a recent speech.

Relatively low-wage sectors like food services and retail have accounted for a large share of the job growth in the last few years; a report in August from the National Employment Law Project, a liberal advocacy group, found that a majority of jobs lost during the downturn were in the middle range of wages, and a majority of those added during the recovery have been low paying.

Ms. Raskin also expressed concern about temporary-help jobs, which account for a growing share of total employment.

Usually an increase in temp hiring is considered a good thing, at least at the start of a recovery, because it indicates that employers are thinking about taking on permanent workers. So far, though, employers seem to be sticking with those temporary contracts.

“Temporary help is rapidly approaching a new record,” said Diane Swonk, chief economist at Mesirow Financial, who noted that there was also a rapid increase in temp hiring during the boom years of the ‘90s. “That of course means more flexibility for employers, and less job security for workers.”

Perhaps more distressingly, 7.6 million workers who want full-time work still can find only part-time work, and their missing work hours do not count toward the official unemployment rate. The number of workers in involuntary unemployment fell slightly from February, but is still about where it was a year ago.

“You gotta do what you gotta do,” said Amie Crawford, 56, of Chicago. After four months spent fruitlessly looking for a new job as an interior designer, a middle-class career she had practiced for 30 years before the recession, she accepted a part-time cashier position at a quick-service health food cafe called the Protein Bar.

She keeps asking for more hours, but her manager’s response is always the same: “He tells me, ‘I try to give you as many hours as I can, but everybody wants as many hours as they can,’ ” said Ms. Crawford.

People like Ms. Crawford are the lucky ones, at least compared to the workers who are still pounding the pavement and may have no source of income at all. Long-term unemployment — joblessness lasting more than six months — has been a persistent problem and could permanently affect workers’ skills, networks and employability.

“This seems to be a long-term sleeper crisis too, as we think about long-term unemployed workers who are in midlife and older workers who are likely dipping into retirement savings in order to stay afloat,” said Christine L. Owens, executive director of the National Employment Law Project. “We’re setting ourselves up for somewhere, 10 years down the road, when a lot of retirees who didn’t expect to live in poverty are going to be in poverty.”

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Economix: Discouraged Workers, Especially at City Hall

Two facts stand out from the dreadful jobs report this morning:

1. People are dropping out of the labor force.

2. This job recession is particularly bad for public sector workers. It is almost the worst on record.



Notions on high and low finance.

In the spring of 2010, there was reason for optimism. Jobs were being added and the labor force participation rate was rising. That meant that some people without jobs had new hope and were looking again. Such a trend does not help the unemployment rate, which doesn’t count you as jobless unless you are looking for a job, but it was a good sign nonetheless.

In April 2010, the participation rate — the proportion of adults with jobs or looking for jobs — rose to 65.1 percent. It had been much higher before the downturn, but that was a lot better than the low of 64.7 percent recorded the previous December.

This month the rate fell another tick, to 64.1 percent. The last time a rate that low was recorded was in March 1984.

The number of state and local government employees fell by 25,000 workers, and is now down 577,000, or 2.9 percent, from the peak reached in August 2008 — the month before Lehman Brothers collapsed.

Only once before — or at least since they started collecting the numbers in the 1950s — did state and local jobs fall that far. In July 1982 the number was down 3.1 percent.

These figures are seasonally adjusted, and you have to suspect that the numbers will get even worse this fall, when a lot of teachers don’t go back to work.

The low point in state and local government jobs in 1982 came four months before the recession officially ended. This recession ended two years ago, but the relentless declines continue.

This time is different in large part because state and local governments are squeezed as never before. Property tax collections have been devastated by collapsing property prices. Washington delayed the worst of the pain with the stimulus plan, but now seems completely unwilling to help. Instead, a lot of politicians seem to think that cutting employment is a positive good.

I have hoped that the recovery was strong enough to survive Washington’s evident determination to tighten fiscal policy despite abundant evidence this was a bad time for such a tactic. Today’s numbers argue that hope was mistaken.

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