South By North Strategies, Ltd.

CHAPEL HILL (January 4, 2013) – The national labor market added 155,000 more jobs than it lost in December. The unemployment rate, meanwhile, held steady at 7.8 percent, which was the lowest rate (seasonally adjusted) recorded since January 2009, when the rate also was 7.8 percent. Despite the net increase in payroll jobs in December, the pace of job growth remained subdued, and the unemployment rate was still abnormally high.

“December was the 27th-straight month of job growth recorded in the United States,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Over the past three months, the national economy has netted an average of 151,000 jobs, a pace that, while positive, is insufficient to push unemployment down to pre-recessionary levels anytime soon. Some 3.5 years into an economic recovery, the national unemployment rate remains 2.8 percentage points above the December 2007 level of 5 percent.”

In December, the nation’s employers added 155,000 more payroll positions than they cut. Gains occurred entirely in the private sector (+168,000), while government employers eliminated 13,000 more positions than they added, due chiefly to reductions by local governments. Furthermore, the payroll employment numbers for October and November underwent revisions; with the updates, the economy gained 298,000 jobs over those two months, not the 284,000 positions previously reported.

Within the private sector, payroll levels rose the most in the education and health services sector (+65,000, with 68.5 percent of the gain attributable to the health care subsector), followed by leisure and hospitality services (+31,000, due almost entirely to gains in the accommodation and food service subsector), construction (+30,000), and manufacturing (+25,000). The trade, transportation, and utilities sector, meanwhile, shed 11,000 positions, followed by the information sector (-9,000).

“The American economy managed to add 1.8 million more positions that it lost during the course of 2012,” noted Quinterno. “The current average monthly rate of job growth recorded in 2012—some 153,000 positions per month—nevertheless is insufficient to fill the sizable jobs gap caused by the most recent recession.”

Slack labor market conditions were evident in the December household survey. Last month, 12.2 million Americans (7.8 percent of the labor force) were jobless and seeking work. That unemployment rate (the same as in November) was the lowest one posted since January 2009, when 7.8 percent of the labor force also was unemployed. In December, the size of the labor force grew by 192,000 persons, and the share of the population participating in the labor force held steady at 63.6 percent, a rate below the one recorded in December 2011. The share of the adult population with a job also dipped in December to 58.6 percent, a rate unchanged from a year earlier. On a positive note, compared to a year ago, more Americans were working in December, and fewer persons were unemployed.

Last month, the unemployment rate was higher among adult female workers than male ones (7.3 percent versus 7.2 percent). Unemployment rates were higher among Black (14 percent) and Hispanic workers (9.6 percent) than among White ones (6.9 percent). The unemployment rate among teenagers was 23.5 percent. Moreover, 7 percent of all veterans were unemployed; the rate among recent veterans (served after September 2001) was 10.8 percent. At the same time, 11.7 percent of Americans with disabilities were jobless and seeking work (not seasonally adjusted).

Jobs remained scarce in December. Last month, the underemployment rate equaled 14.4 percent. Among unemployed workers, 39.1 percent had been jobless for at least six months with the average spell of unemployment lasting for 38.1 weeks. The leading cause of unemployment remained a job loss or the completion of a temporary job, which was the reason cited by 52.2 percent of unemployed persons in December. Another 29.2 percent of unemployed persons were reentrants to the labor market, while 10.5 percent were new entrants. Voluntary job leavers accounted for the remaining 8 percent of the total.

“Despite the job growth experienced in December, the American labor market remains mired in the doldrums,” observed Quinterno. “The rate of job growth is subpar relative to the problems facing the national labor market, and the labor market is not on pace to generate enough jobs for all the Americans who need and want work anytime soon.”