A limping economy reflected in feeble jobs numbers and inadequate policy prescriptions. Those are the conclusions to be drawn from the Department of Labor’s March Jobs report and Fed Chair Janet Yellen’s March 31 speech in Chicago.
The March jobs situation illustrates the problems of a static economy which added 192,000 jobs, down from February’s 197,000 jobs. Unemployment was unchanged at 6.7 percent. Unemployment among African Americans rose over the previous month, from 12 to 12.4 percent, while Latino unemployment decreased slightly from 8.1 to 7.9 percent.
The anemic recovery of the labor market proceeded apace in January, with unemployment ticking down by only a tenth of a point, from 6.7 to 6.6% (10.2 million people.) Job creation sputtered along at little more than half the rate that prevailed in the autumn, with only 113,000 jobs added. That is only just enough to keep up with population-driven growth in the labor force. Taken together with the even weaker job-creation performance in December (a mere 75,000 jobs added) it once again raises doubts about the depth and durability of the recovery that started in June 2009. It is no small irony that the January report, which documents the persistence of historically high (35.8%) levels of unemployment lasting over half a year, was released only a day after a Senate filibuster blocked the approval of extended unemployment insurance payments to the long-term unemployed.
It is well known that that the standard unemployment rate tells only about half the story of the shortage of jobs. Ignored by the official statistics are those who have had to settle for only part time work, and those whose efforts to find work over the previous 12 months have not included explicitly “looking” for work in the past week. Counting these officially uncounted job-seekers would give us an overall unemployment rate of 12.7% (20 million people).
This article, authored by CPEG’s Ron Baiman, originally appeared on the Dollars and Sense; Real World Economics blog in December 2013.
Having boxed themselves into a political dead-end by adopting the austerity agenda of the business community as represented by the Illinois “Civic Federation,” Democratic House Speaker Michael Madigan and Illinois and Democratic Governor Pat Quinn on Tuesday, Dec. 3, rammed through a state Pension cutting bill that would reportedly reduce the state’s $ 100 B unfunded pension liability by $160 B. The Democratic President of the Senate, John Cullerton (a supporter of a Senate bill negotiated with the unions that would have cut less and given workers a choice of options), voted for the House bill, but warned it had “serious constitutional problems” and was reportedly silent during the debate, not present when the final deal was announced and a no-show at an earlier meeting attended by the three other legislative leaders. As is documented below, Cullerton’s concerns are well-founded as this bill presumes that $160 B of pension liability reductions are somehow equivalent to a roughly $26 B cut in the value of pension contributions from state workers.
The theme of this month’s jobs report ought to be ‘not enough.’ The latest disappointing numbers are far lower than the optimistic expectations voiced by many economists after ADP reported payroll growth of 238,000 in December 2013. CPEG has been arguing for years that what job growth the U.S. economy has seen since the official end of the ‘great recession’ has been inadequate. In fact, the total number of employed workers in the U.S. is still lower than it was before the start of the great recession. The Bureau of Labor Statistics announced this morning that the economy added 74,000 jobs in December 2013, falling far short of expectations. This anemic job growth brings the total employment in the country to less than what it was in November 2007, the month before the great recession started. It’s important to note that if the economy had added the 200,000+ jobs that many expected, we would still not have reached pre-recession employment levels. Even a ‘good’ jobs report would have been disappointing.