fresh voices from the front lines of change







Today’s Bureau of Labor Statistics jobs report shows 192,000 net new jobs created in February, the best monthly gain in the nine months since the peak of hiring temporary Census workers in May 2010. Excluding the loss of 30,000 jobs in local, state and federal agencies, the private sector added 222,000 jobs in February, the 12th consecutive month of private sector job growth and the most since adding 229,000 in April, 10 months ago.

Over the past 12 months, the U.S. has added 1.3 million jobs. Excluding the 257,000 jobs lost in federal, state and (especially) local government agencies, the private sector alone has added 1.5 million jobs. The U.S. clearly has reversed the severe job losses that began three years ago. Still, it must be appreciated that just to recover the still 7.4 million total jobs lost over these past three years, the U.S. would need to continue the solid pace of February’s job growth for 39 consecutive months.

That is, if the pace of job growth in February were to continue every month, by May 2014 the U.S. would have recovered to the number of jobs it had in February 2008. Although this would still leave a more than six-year lag in overall job growth, it would represent a big improvement from today, when the U.S. has 2 million fewer jobs than a decade ago in February 2001 and, indeed, 387,000 fewer jobs than 11 years ago in February 2000.

If the loss of 30,000 jobs in state and local governments in February continues to worsen, or if governments begin to sharply reduce their contracting jobs to private sector firms, even the current job growth could be reversed quickly. (The Bureau of Economic Analysis reported earlier this week that reduced real spending by federal, state and local government agencies in the fourth quarter of 2010 reduced GDP growth at a 0.3% rate – along with the production, jobs, incomes and tax revenues that growth creates.

Also troubling in today’s BLS report is that the average number of hours paid per private sector job remained unchanged in February, at 34.2 hours/week, and nominal wages per hour were virtually unchanged. Therefore, nominal weekly wages were also unchanged, which means that they did not keep up with the rising price of gasoline, food and other household expenses. Real wages almost certainly fell in February for the third consecutive month. (BLS reports on February consumer prices and real wages on March 17.)

I should emphasize that the average workweek in the private sector is only 34.2 hours per week with many of the major private industries having an even shorter workweek: the 13.1 million leisure and hospitality jobs pay employees for an average of only 25.9 hours per week; the 14.5 million jobs in retail pay for an average of only 31.4 hours per week; the 19.8 million fast-growing jobs in private education and health care pay for an average of only 32.6 hours work each week. This short work week, in the form of a high percentage of part-time jobs—often to avoid requirements to provide health care insurance, retirement or other benefits—is a key reason that many of today’s jobs do not provide a middle-class “breadwinner” or “mortgage-payer” income.

Most of the jobs created in February and over the past year have been in these short work week, low-wage industries and in temp agencies. (See this table for industry-by-industry jobs data.) An exception is that construction and manufacturing each added 33,000 jobs in February, with manufacturing also adding jobs year over year after losing over one-third of its jobs in the past 11 years.

The past lost decade for U.S. jobs is unprecedented since the decade ending in 1938 when President Roosevelt and a fiscally conservative Congress prematurely reversed New Deal programs that created double-digit growth from 1933-36, pushing the economy into a deep, double-dip downturn. (See my earlier post on "The 'FDR Failed' Myth.")

Today’s BLS report also shows the unemployment rate falling to 8.9% in February. However, this decline is the result of a unique, sustained three-year decline in the size of the U.S. labor force. (The labor force is defined as those who say they are working or actively looking for work.) The labor force normally increases every month along with population growth. But over the past three years the number of people who say they are in the labor force has fallen by 378,000 people, down 0.2%. In records back to 1947, until recent months, there has never been a sustained, three-year period of declining labor force.

The BLS reports that the labor force did grow in February but only by an anemic 60,000 people—about half the normal rate—and this was after plunging by 504,000 in January and by 260,000 in December. Indeed, the number of people officially counted in the U.S. labor force has now plunged by 871,000 people over the past six months.

Those not counted in the labor force, including those that are not being added each month, are the missing unemployed.

It’s important to note that in November 1982, when the official unemployment rate reached a post-World War II record of 10.8%, this reflected a labor force that had grown by 5.0% over the previous three years. That is, if there were as many uncounted jobless in November 1982 as now, the official jobless rate would have been only 5.6%. Conversely, if the jobless had stayed in and joined the labor force today as they did in 1982, today’s official Unemployment rate would be 14.1%.

There are now 13.7 million people officially classified as unemployed and another 6.4 million who say they are not looking for a job (and not counted) but who want a job. Add to this 20.1 million jobless, another 8.3 million who say they want to work full-time but can only find part-time work and you realize there are a minimum of over 28 million people unable to find full-time work in America three years after the worst downturn since 1929.

Today’s BLS data suggest many explanations for the massive disappearance of the unemployed from active job searches. Six million people (more than twice the number ever before recorded) have been actively looking for work for 27 weeks or longer – and are therefore still counted as jobless. The average number of weeks unemployed, by those still actively looking and counted, hit an all-time record of 37.1 weeks in February, again almost double the 21.2 weeks in July 1983 following that extremely severe recession.

The lost decade of U.S. jobs has inflicted once-unimaginable suffering and vulnerabilities to many tens of millions of men, women and children. Today’s jobs report should remind everyone of just how urgent and difficult is the rebuilding task ahead.

Charles W. McMillion is president and chief economist of MBG Information Services.

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