Jobs Byte
By Dean Baker, Co-Director, Center for Economic
and Policy Research, www.cepr.net
Jobs Byte is published each month upon release of
the
Bureau of Labor Statistics' employment report.
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contact the
Center for Economic and Policy Research at
202 293-5380 ext. 206 or [EMAIL PROTECTED]
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Unemployment Rate Rises to 4.2 Percent
The January employment report provided the
first
clear evidence that the slowing economy is
leading to higher unemployment, as the
unemployment rate increased by 0.2 percentage
points to 4.2 percent. This increase occurred in
spite of the fact that the establishment survey
showed the economy adding 268,000 new jobs,
214,000 of which were in the private sector.
The rise in the unemployment rate was largest
for
the most disadvantaged segments of the workforce.
The unemployment rate for African-Americans rose
by 0.8 percentage points to 8.4 percent. This is
more than a full percentage point above the 7.0
percent low hit in September. The unemployment
rate for Hispanics rose by 0.3 percentage points
to 6.0 percent, 1.0 percentage points above its
October low. By contrast, the unemployment rate
for whites rose by just 0.1 percentage point to
3.6.
The same pattern showed up in unemployment
rates
by education level. The unemployment rate for
workers with less than a high school degree rose
by 0.5 percentage points to 6.8 percent, and for
high school graduates it rose by 0.4 percentage
points to 3.8 percent. By contrast, the
unemployment rate for college graduates
was unchanged at 1.6 percent.
The relatively strong job growth reported in
the
establishment survey seems somewhat inconsistent
with the weakness in the household data. Part of
this difference is due to seasonal factors. For
example, the establishment survey showed a jump
of 145,000 jobs in construction in January, an
increase that accounts for two-thirds of the
growth in private sector jobs in the month. This
is explained primarily by good weather in January
compared to very bad weather in December.
Construction has added jobs at the rate of 39,000
per month over the last three months, a very
healthy growth pace.
It is also important to note that there was a
large downward revision to the December data.
Overall job growth in December was revised down
from 105,000 to 19,000, with private sector
growth revised from 49,000 to 10,000. Over the
last three months, overall job growth has
averaged 113,000 per month, with private sector
job growth averaging 112,000.
As noted in the last job byte, even this
figure
may be somewhat overstated by job imputations for
new firms. In the period from October to
December, 165,000 jobs were added each month to
the survey findings to account for new firms.
This month, the imputation is 126,000 jobs, which
may still be too high for an economy that is
growing slowly, if at all.
Manufacturing continued to lose jobs rapidly
in
January, as employment dropped by another 65,000.
Since October, manufacturing has lost 139,000
jobs. The decline in hours worked has been even
sharper, with a drop of 2.3 percent (8.8 percent
at an annual rate) over these three months. It is
worth noting that the jobs lost have all been
among production workers, with non-production
employment falling by just 1,000 in this period.
While job loses are widespread across
manufacturing, the auto sector has been hardest
hit with a loss of 38,000 jobs. Coupled with a
shorter average workweek, this has led to a
decline in hours worked of 12.5 percent
over the quarter (41.5 percent at an annual
rate). Hours worked in the steel and textile
industry have both declined by close to 5.0
percent over this period.
Outside of manufacturing, job growth was
reasonably healthy. Retail trade added 27,000
jobs and the FIRE sector added 29,000. The
personal and business services sector added
81,000 jobs, a pace which is down about
30,000 from its growth rate in the first nine
months of last year. Notable gains were 20,000
new jobs in amusement parks and a jump of 30,000
jobs in health care.
Temporary help agencies lost 39,000 jobs in
January. Employment in this sector is now
reported at 162,000, or 4.7 percent, below its
September level. The actual decline is almost
certainly larger than this, since many of the
jobs imputed for new firms appear in this sector.
Employment in this sector is often taken as a
good indicator of current labor market tightness.
The establishment survey showed no hourly wage
growth for the month. While this is probably a
statistical aberration, wage growth does seem to
be quite modest. Over the last three months,
wages grew at a 4.1 percent annual rate. But in
manufacturing they grew at a 2.6 percent rate and
in retail trade at just a 2.1 percent rate.
