March Employment: Still Encouraging But…

Morris Segall      "hard core" unemployed, business profits, Economic Growth, employment report, hourly earnings, inflation, job creation, jobs for college graduates, labor market "slack", labor market growth, unemployment

The March employment report continues to show the improving trends we have been recounting in our previous employment blog articles (March 6 and February 5, 2011). The March report showed a second straight month of more than 200,000 new jobs created in the private sector. This is the highest consecutive level of private sector monthly job creation since well before the recession. According to the Household survey, nearly 1 million more workers have been employed since March, 2010.   

The March report showed a continuation of the positive trends of: fewer unemployed from the loss of part time work; a further increase in manufacturing jobs; another decline in the level of unemployed from 5-26 weeks, particularly in the important 15-26 weeks category; and further improvement in management and professional jobs in the important Business and Professional Services segment.

However, all is still not well in the job market despite the recent improvement. Temp jobs still comprise the “lion’s share” of Professional and Business Services employment. The labor market is not growing. The number of persons not in the labor force or marginally attached continues to  grow and the employment/population ratio still stands at a recessionary level of 58.5%.  The increasing “hard core” unemployed of 27 weeks and longer comprised almost 46% of the total number of recorded unemployed in March versus just under 44% in March of 2010. This is becoming a major socio-economic dilemma for this country. Many of the jobs created in March were lower wage service jobs in healthcare, wholesale and retail trade and in the leisure and hospitality industries. Compounding this issue is weak wage growth overall. Average hourly earnings reflected in the March employment report showed annual growth of 1.7%, far less than the nearly 4% annualized growth in nominal consumer prices for the six month period ending in February.  Our March 7th website article on inflation highlighted the increasing problem of rising prices for consumers and businesses. Continued price escalation which pressures consumer discretionary spending and business profits could hurt further permanent hiring gains. 

So while the recent trends in employment, as reflected in the monthly jobs report and weekly first time unemployment claims, are showing concrete improvement, the gains are not uniform and still leave a large amount of “slack” in the U.S. labor force. In addition, there are far too many instances where mature, experienced workers and recent college graduates cannot find meaningful and permanent jobs with good salaries. This will hurt economic growth, longer term, if it is not corrected. However, in the near term,  we remain optimistic the recent gains and improved outlook for job creation can be maintained for this year and into next.

Morris R. Segall