Saturday, July 03, 2004
Some News on U.S. Employment
The United States economy created 112,000 new jobs in June 2004. This is good news, or at least better news than a loss of 112,000 jobs would have been. But given the natural business cycles, recessions tend to be followed by employment upswings in due time. The latest recession appears atypical in many ways, and one of these is it's length: every other recession since 1939 has shown full recovery of the lost jobs within 31 months of the start of the recession. This time, thirty-nine months later, 1.2 million jobs are still missing.
The jobless nature of this recovery has economists scratching their heads. But not the Bush administration: they believe that we are experiencing the beginning of a very vibrant recovery and that the jobs are just lagging behind a little. Perhaps. But the administration has been unable to match its own employment predictions. According to them we should have 2,230,000 more jobs now, at the end of the first year after the highly touted tax cuts took effect. In other words, they promised much more than they are delivering.
Consider the numbers: The unemployment rate has remained steady at 5.6% since January this year, and the rate of underemployed people (those who work part-time involuntarily, those who are so discouraged that they have stopped looking for jobs and those who are only marginally attached to the labor force) is now 9.6%, up from 7.3% at the start of the recession. All this despite the increased number of jobs.
And what are the jobs like that were lost in the recession compared to those that are now being added? It seems that the new jobs are lower paying, less stable, self-employed and part-time jobs (eBay, anybody?), while the lost jobs were what's called high-quality jobs in sectors such as transportation, utilities, natural resources and manufacturing. The numbers of part-time workers and the self-employed have risen by roughly 5% since early 2002. Compare this to the 1.7% growth in regular employees. Since late 2001, jobs in high-paying industries fell by more than 2% and the jobs in low-paying industries rose by 1.2%.
It's fair to summarize these overall changes as a labor market that is paying less for jobs with less stability. We are not getting the good old jobs back; instead we are being offered poorer jobs with less hours of work. To be fair, the most recent statistics indicate that some of the better paying sectors are also beginning to hire, but the overall impact of these factors is to make the quality of the American jobs worse. For those who can find them, that is.