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Around the Halls: April Unemployment Numbers

On May 7, the Department of Labor released its April jobs report indicating that U.S. employers added 290,000 jobs last month. Scholars from around the halls of Brookings offer their thoughts on the report and what it means for the rebounding economy.

 

In this edition:

Positive News in April Jobs Report
Karen Dynan, Vice President and Co-Director, Economic Studies

The April employment report is the best we have seen since the recession started more than two years ago. Payrolls expanded by 290,000 jobs in April, marking the fourth monthly gain in a row. In total, we have seen an increase of close to 600,000 jobs since the end of last year. The most positive news in the report was that a large share of job growth was outside of the government sector—an essential ingredient for a sustainable recovery. Temporary hiring for the 2010 Census added more than 60,000 jobs, but the private sector added about 230,000 jobs. And, within the private sector, we are seeing broad-based gains, with payrolls in manufacturing, professional and business services, health care, and in leisure and hospitality all showing sizable increases.

Despite the improvement last month, we need to be mindful that the labor market remains very weak. We have only made up a small share of the more than 8 million jobs that were lost to the recession, not to mention the jobs that we would have created for our growing population had the economy not fallen into recession. And, the unemployment rate remains stubbornly high, moving up to 9.9 percent in April from 9.7 percent in March. The increase reflects more people looking for jobs now, and only time will tell whether this development is a positive sign—reflecting more optimism about the prospects for being hired—or whether it is a reflection of the extreme financial strains that many American families continue to feel.


Robust Gains in the Job Market 
Gary Burtless, Senior Fellow, Economic Studies

The latest BLS report on job market conditions shows that April was another month of solid gain. Both payroll employment reported by employers and employment levels reported by working-age adults showed sizeable gains. The most encouraging evidence once again came from the household survey. Since the end of last year employment gains in this survey have averaged about 416,000 a month.

The reported jump in household employment in April was 550,000. The rise in employment fell far short of what was needed to reduce the unemployment rate because more than 800,000 adults flooded into the work force. The excess of new labor force participants over the number of new job holders pushed up the unemployment rate by 0.2%. In this case the growth in the number of active job seekers represents good news. It reflects the fact that many Americans are now more optimistic about their chances of finding a job. After reaching a 25-year low in December 2009, the labor force participation rate has now increased 0.6 percentage points. The employment-to-population ratio has increased by the same amount.

Even though the household survey gives evidence of a robust recovery in employment, it also shows unmistakable evidence of the heavy toll taken by the recession.

The number of unemployed workers who have been jobless 6 months or more reached a new all-time high in April. The number of long-term unemployed—6.7 million—is 9.6% higher than it was at the end of last year. It is more than 5 times greater than the number of long-term unemployed when the recession began at the end of 2007. In no recession since the Great Depression has long-term joblessness represented such a serious challenge to working families and policymakers.

For the third month in a row the employer survey showed significant growth in payroll jobs, though the increase is substantially smaller than the employment gains shown in the household survey. Once again, the gains are widely distributed across industries, with employment increases in construction and manufacturing as well as in a broad range of service-producing industries. An overwhelming share of employment growth since the start of the year has been in the private sector. In fact, without the gains in federal employment since the start of the year, government employment would have shrunk. In an unmistakable sign of the fiscal pressures facing state and local governments, the number of state and local government employees has edged down 65,000 (or 0.3%) since the end of last year.

In a heartening sign, average weekly hours of work have also increased in recent months. The combination of higher payroll employment and a longer average workweek has meant that aggregate weekly hours worked in the private sector have increased 1.3% since December 2009. Both the employer survey and household survey thus provide clear evidence the labor market, though still very weak, is finally recovering.