Monday, July 06, 2009

Nine years of job growth wiped out.

Nine Years of Job Growth Wiped Out

Jobs Picture for July 2, 2009

by Heidi Shierholz with research assistance from Kathryn Edwards and Andrew Green
http://www.epi.org/publications/entry/jobs_picture_20090702/

This morning's employment report from the Bureau of
Labor Statistics marked a year and a half of job loss
and showed that the economy shed another 467,000 jobs
in June. Since the start of the recession, the labor
market has lost a total of 6.5 million jobs, down from
138.2 million in December 2007 to 131.7 million in
June. As the chart below shows, the peak number of
jobs after the expansion of the 1990s was 132.5 million
jobs in February 2001. We are currently 838,000 jobs
below that figure. In fact, the entire growth in jobs
over the last nine years has now been wiped out - the
economy currently has fewer jobs than it had in May
2000 (when there were 131.9 million jobs). And
importantly, this decline was not occurring because the
jobs weren't needed - the labor force has expanded by
12.5 million workers since then, as the population
continued to grow. This is the only recession1 since
the Great Depression to wipe out all jobs growth from
the previous business cycle, a testament both to the
enormity of the current crisis and to the extreme
weakness of jobs growth over the business cycle from
2000 to 2007.

Furthermore, the loss of 6.5 million jobs over the 18
months of this recession dramatically understates the
hole in the current labor market. To keep up with
population growth, the economy needs to add around
127,000 jobs every month, so the labor market needed to
grow 2.3 million jobs over this period. All told, the
labor market is currently 8.8 million jobs below where
it would need to be to maintain pre-recession
employment levels. If there is any good news in this
report, it is that despite the increase in job loss
from May, the pace of losses still appears to be
slowing from the enormous declines of earlier this
year. In the first quarter of 2009, the economy shed
691,000 jobs per month, on average, but in the second
quarter the losses averaged 436,000 jobs per month.

The continued losses, however, mean unemployment is
still rising. This recession has set a new
unemployment benchmark as unemployment has increased by
4.6 percentage points, higher than the rise of
unemployment in the 1980s recession. Unemployment rose
from 9.4% in May to 9.5% in June as 218,000 people were
added to the jobless rolls. One of the reasons the
unemployment rate did not rise more than it did in June
was due to a shrinkage of the labor force of 155,000
workers, partially offsetting the labor force gain in
May of 350,000 workers. There are now 14.7 million
unemployed workers in this country, up 7.2 million from
the start of the recession. The picture changes
dramatically, though, when considering the broader
measure of underemployment. If the ranks of the
"marginally attached" (jobless workers who want a job
but are not actively seeking work and so are not
counted as officially unemployed) and "involuntary
part-time workers" (those who want full-time jobs but
can't get the hours) are added to the mix, the figure
rises to 25.9 million, which means nearly one in six
U.S. workers (16.5%) is either un- or underemployed.

Furthermore, with less than one job opening for every
five job seekers, unemployed workers are getting stuck
in unemployment for long periods. In June, 4.4
million people, 2.8% of the labor force, had been
unemployed for at least six months, surpassing the
record high of 2.6% set in the early 1980s. While
today's overall unemployment rate has not reached the
peak rate of the early 1980s, the rate languishing in
long-term unemployment has. Another new record:
currently 29% of unemployed workers have been jobless
for over half a year.

While all groups have experienced large increases in
unemployment during this recession, some are feeling
the effects of the downturn more than others. In June,
unemployment was 14.7% among black workers, 12.2% among
Hispanic workers, and 8.7% among white workers
(increases of 5.8, 6.0, and 4.3 percentage points,
respectively, since the start of the recession). Male
unemployment increased to 10.6% in June, compared to
8.3% for women (increases of 5.6 and 3.5 percentage
points). For workers with a college degree, the
unemployment rate is 4.7%, and unemployment among those
with only a high school diploma, at 9.8%, is more than
double that of college-educated workers. Workers with
less job experience are also particularly hard hit -
those age 16-24 face an unemployment rate of 17.8%;
25-54 year olds are seeing 8.5%; and those over 54 are
at 7% (up 6.2, 4.5, and 3.9 percentage points,
respectively, since the start of the recession).

Wage growth, which held up for the first year of the
recession, has collapsed over the last six months. In
the second quarter of 2009, nominal hourly wages of
production workers grew at a 0.7% annualized rate,
which is only one-sixth of the 3.9% growth rate from
December 2007 to December 2008. And as workers have
seen their hours cut back, nominal weekly earnings have
actually fallen, declining at a -0.6% annualized rate
in the second quarter. Along with undercutting the
living standards of workers, the collapse of wage
growth puts further downward pressure on the overall
economy by constraining the growth of consumption.

Manufacturing and construction saw big employment
losses in June, as has been the case throughout the
downturn. Manufacturing saw a decline of 136,000 jobs
last month, (most of that - 112,000 - in durable
goods manufacturing) for a total drop since December
2007 of 1.9 million, or 14.0% of that sector's
employment. June's decline, however, was smaller than
the average loss of 182,000 jobs per month for the
prior six months. Construction saw a decline of 79,000
jobs in June, for a total of 1.3 million jobs lost in
this recession (17.1% of employment). This was a
larger decline than May's (which was 48,000), but
significantly smaller than the average of the prior six
months (which was 103,300).

Another sector that saw a big loss in June was
professional and business services, losing 118,000 jobs
after declining only 48,000 jobs in May. The federal
government lost 49,000 jobs in June, mostly due to
layoffs of temporary workers hired for preparations for
the 2010 Census. State governments lost 4,000 jobs,
and local government employment remained basically
flat, adding 1,000 jobs. Education and health services
added 34,000 jobs in June, the only major sector that
saw growth.

Rapid declines continued in the index of aggregate
weekly hours - a measure of the total number of hours
worked in the economy and thus a more comprehensive
measure of the economic contraction than employment
because it captures both job loss and reductions in
hours for workers who kept their jobs. It fell 0.8% in
May (an annualized rate of 9.2%), for a total of 8.2%
since the start of the recession, a substantially
larger fall than in earlier recessions.

The June employment report shows that while the pace of
losses is stabilizing, the U.S. labor market is still
losing jobs at a stunning rate, and unemployment
continues to rise. It is important that the relatively
good news of the stabilizing pace of job loss does not
overshadow the fact that the economy continues to shed
hundreds of thousands of jobs per month and the pain in
the real economy is deepening. Unemployment will
almost certainly pass 10% by the end of the year; the
economic case for additional policy interventions to
generate jobs and to assist those adversely affected by
the recession keeps growing stronger. It is apparent
that, despite the substantial positive impact of the
February recovery package, the economy's dramatic
deterioration from November to March was even greater
than anticipated. Clearly, more work needs to be done
to mitigate further damage.

Note
1. This counts the "double dip" recession of the early
1980s as one recession.

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