Economic policy reports, blog postings, and media stories of interest:
CHAPEL HILL (February 4, 2011) – A complex national employment report for January offered few clear insights into the state of the American job market. Last month, employers added just 36,000 more payroll positions than they eliminated, but at the same time, employment rose and the unemployment rate fell to nine percent.
“The January employment report was a messy one due to the inclusion of multiple annual data adjustments and the introduction of certain methodological changes,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “While the effects of those changes will be debated, the bottom line is that the labor market still is not on a speedy path to recovery.”
In January, the nation’s employers added 36,000 more payroll positions than they cut. Gains occurred exclusively in the private sector (+50,000), while government payrolls fell by 14,000 positions due chiefly to cuts at the local level. In recent months, the government sector – the local government sub-sector in particular – has weighed on job growth. Additionally, the payroll employment numbers for November and December were revised upwards. With the revisions, the economy netted 214,000 jobs over those two months rather than the 174,000 positions previously reported.
Private-sector gains in January occurred primarily in manufacturing (+49,000) and professional and business services (+31,000). Private-sector losses occurred in construction (-32,000) with all other private-industry groups experiencing few or no changes.
“The January employment report offered little evidence that a recovery is taking hold in the labor market,” noted Quinterno. “The current pace of growth, while positive, will not produce the jobs needed to accommodate all those Americans who need work.”
In contrast to the payroll report, the household survey for January was more positive. Last month, 13.9 million Americans (9 percent of the labor force) were jobless and seeking work. While the number of unemployed Americans and the unemployed rate fell last month, the size of the labor market fell as well. All of the changes are tied to statistical adjustments and therefore data for December and January are not strictly comparable. On a related note, the share of the population participating in the labor force (64.2 percent) remained at a level last seen in the early 1980s.
Last month, proportionally more adult male workers were unemployed than female ones (8.8 percent vs. 7.9 percent). Similarly, unemployment rates were higher among Black (15.7 percent) and Hispanic workers (11.9 percent) than among White ones (8 percent). The unemployment rate among teenagers was 25.7 percent. With the exception of teenagers, unemployment rates for every major demographic group were lower in January than in December, though methodological changes limit the usefulness of comparisons.
Furthermore, 9.9 percent of all veterans were unemployed in January. The unemployment rate among recent veterans (served after September 2001) was 15.2 percent.
“Despite the sharp drop in the unemployment rate, jobs remained difficult to find in January,” added Quinterno. “Last month, the underemployment rate equaled 16.1 percent. Among unemployed workers, 43.8 percent had been jobless for at least six months with the average spell of unemployment lasting for 36.9 weeks.”
“The messy January employment report offers little guidance as to the state of the American job market,” observed Quinterno. “The sharp drop in the unemployment rate seemingly is inconsistent with the recorded level of payroll job growth. Yet the confusion should not obscure the fact that the labor market remains in ill-health by most any objective measure.”
A recent brief from the N.C. Budget and Tax Center sketched eight strategies that could help close North Carolina’s estimated $3.7 billion budget shortfall. From the brief:
Over the course of the recession, demand for certain state‐funded services has increased alongside rising poverty and declining median household income. There are more adult workers upgrading their skills at community colleges and more elderly, disabled, and low‐income residents in need of basic assistance. In addition, the state must continue to fulfill its obligations to educate children, keep the public safe, protect the environment, and invest in the public structures that support a sustained economic recovery and high quality of life for all North Carolinians.
…
The rising need for vital services and the depression of revenues to pay for those services is driving the state’s budget shortfall. Current estimates suggest that state policymakers arriving in Raleigh this week face a $3.7 billion shortfall. This shortfall is in addition to two years of budget cuts that have resulted in a 10‐percent cumulative reduction of the state budget.
…
While the predictions of economists like those at Moody’s Analytics suggest that North Carolina is likely to recover faster than the nation, it is certainly true that job growth will be slow, and state revenues will not recover to pre‐recession levels for several years. It is therefore essential that policymakers in North Carolina leave no stone unturned as they seek solutions to the state’s fiscal challenges….
Economic policy reports, blog postings, and media stories of interest:
For the benefit week ending on January 15th, 24,837 North Carolinians filed initial claims for state unemployment insurance benefits, and 149,113 individuals applied for state-funded continuing benefits. Compared to the prior week, there were more initial and continuing claims. These figures come from data released by the U.S. Department of Labor.
Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 24,151 initial claims were filed over the previous four weeks, along with an average of 147,191 continuing claims. Compared to the previous four-week period, there were more initial and continuing claims.
One year ago, the four-week average for initial claims stood at 30,020 and the four-week average of continuing claims equaled 217,879.
While the number of claims has dropped over the past year so has covered employment. Last week, covered employment totaled 3.7 million, down from 3.9 million a year ago.
The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.
Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions. Also, the four-week average of new claims generally have been on the rise since the end of September.
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