by Bill McBride on 5/04/2012 10:29:00 AM
Friday, May 04, 2012
Another disappointing report indicating sluggish employment growth.
It is probably worth a mention that there are now more private sector jobs than when President Obama took office, but the public sector is continuing to hemorrhage jobs (see third and fourth graphs).
Some numbers: There were 115,000 payroll jobs added in April, with 130,000 private sector jobs added, and 15,000 government jobs lost. The unemployment rate declined to 8.1%. U-6, an alternate measure of labor underutilization that includes part time workers and marginally attached workers, was unchanged at 14.5%. This remains very high - U-6 was in the 8% range in 2007 - but this is the lowest level of U-6 since early 2009.
The participation rate decreased to 63.6% from 63.8% (a new cycle low) and the employment population ratio also decreased slightly to 58.4%.
The change in February payroll employment was revised up from +240,000 to +259,000, and February was revised up from +120,000 to +154,000.
The average workweek was unchanged at 34.5 hours, and average hourly earnings were essentially unchanged. "The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in April. ... In April, average hourly earnings for all employees on private nonfarm payrolls rose by 1 cent to $23.38. Over the past 12 months, average hourly earnings have increased by 1.8 percent." This is sluggish earnings growth, and less than inflation. Earnings are still being impacted by the large number of unemployed and marginally employed workers.
There are a total of 12.5 million Americans unemployed and 5.1 million have been unemployed for more than 6 months. These numbers are declining, but still very high.
Through the first four months of 2012, the economy has added 803 thousand total nonfarm jobs - this is a better pace than in 2011, but still sluggish.
Employment-Population Ratio, 25 to 54 years old
Click on graph for larger image.
Since the participation rate has declined recently due to cyclical (recession) and demographic (aging population) reasons, an important graph is the employment-population ratio for the key working age group: 25 to 54 years old.
In the earlier period the employment-population ratio for this group was trending up as women joined the labor force. The ratio has been mostly moving sideways since the early '90s, with ups and downs related to the business cycle.
This ratio should probably move back to or above 80% as the economy recovers. So far the ratio has only increased slightly from a low of 74.7% to 75.7% in April (this was down slightly in April from March.)
Percent Job Losses During Recessions
This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at maximum job losses.
In the previous post, the graph showed the job losses aligned at the start of the employment recession.
Private Sector Jobs Added
These two graphs compare public and private sector job losses (or added) for President George W. Bush's first term (following the stock market bust), and for President Obama's current term (following the housing bust and financial crisis). The Bush term is added for comparison purposes.
There are many differences between the two periods. Both followed the bursting of a bubble (stock and housing), although the housing bust also led to a severe financial crisis. As Reinhart and Rogoff noted, recoveries from financial crisis are usually very sluggish. See: "The Aftermath of Financial Crises".
The employment recovery during Mr. Bush's first term was very sluggish, and private employment was down 913,000 jobs at the end of his first term. The recovery has been sluggish under Mr. Obama's presidency too, but there are now 35 thousand more private sector payroll jobs than when Mr. Obama's term started.
Public Sector Jobs Lost
A big difference between Mr. Bush's first term and Mr. Obama's presidency has been public sector employment. The public sector grew during Mr. Bush's term (up 900,000 jobs), but the public sector has declined since Obama took office (down 607,000 jobs). These job losses are at the state and local level, although the Federal government has been losing jobs over the last year. There job losses are still a significant drag on overall employment.
It appears the state and local public sector job losses are slowing, and it is likely that the decline in state and local public payrolls will end mid-year 2012. However the Federal government jobs losses will probably continue.
Part Time for Economic Reasons
From the BLS report:
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged in April at 7.9 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.The number of part time workers increased slightly in April to 7.85 millon.
These workers are included in the alternate measure of labor underutilization (U-6) that was unchanged at 14.5% in April - still very high, but the lowest level since early 2009.
Unemployed over 26 Weeks
This graph shows the number of workers unemployed for 27 weeks or more.
According to the BLS, there are 5.1 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 5.308 million in March. This is very high, but this is the lowest number since mid-2009.