Series: jobs
Brookings on Job Numbers

A Healthier Job Market at Last: Comments on “The Employment Situation – March 2011”

Gary Burtless

For the second month in a row both the household survey and employer survey showed robust gains in employment. The household survey continues to give a rosier picture of job gains, but both surveys agree in showing much faster employment growth than we saw through most of 2010. Employment gains in December 2010 through March have averaged 239,000 a month according to the household survey and almost 158,000 per month according to the survey of employers.

The employer survey permits us to pinpoint areas of strength in the job market. The health care industry continues to register strong employment gains, as it did throughout the recession and early recovery. Professional and business service employment has also rebounded strongly, and job gains in those industries continued in March. The temporary help services industry added 1.3% to its payroll in March, and it has added 361,000 jobs, or about 19%, to payrolls since December 2009. Employment in manufacturing also continues to rise, especially in durable goods industries. Manufacturing payrolls have increased 211,000 since the end of 2009.

The employer survey also highlights areas where job creation has been weak or nonexistent. The construction industry has shrunk over the past year, and construction employment remains in a very deep slump. Local government payrolls fell again in March; they have shrunk 303,000, or more than 2% since December 2009. On the other hand, state government payrolls stabilized in March. They have been declining slowly since early in 2009. Given the fiscal situation of most state and local governments, it is unlikely that public sector employment will be a source of major job gains anytime in the next year. More likely, government employment will continue to shrink.

The impressive employment gains have reduced the ranks of the unemployed. The number of unemployed workers fell 131,000 (1%) in March, and the number has declined almost 1.7 million (11%) since the job market recovery got under way in early 2010. The unemployment rate has fallen 1 percentage point, to 8.8%, since November 2010. Very little of the decline has been due to a drop in the number of Americans in the labor force. In fact, the labor force participation rate has remained steady since the beginning of this year.

Unfortunately, the improvement in the job market has done little to reduce the ranks of the long-term unemployed. The March household survey shows that the number of Americans who have been unemployed for 6 months or longer increased almost 130,000 in March. The number of long-term unemployed was essentially the same in March 2011 as in December 2009, when the labor market recovery began. The number of long-term unemployed was almost 4.8 million higher than the number in December 2007, the last month of the 2002-2007 economic expansion.

The latest jobs report contains another hint of labor market weakness: Workers’ real earnings are now beginning to slip. Between October 2010 and February 2011, real hourly and weekly earnings in the private sector fell 1.1%. Before last October, real weekly earnings were trending slowly upward because of a combination of increased weekly hours of work and slow improvement in workers’ real hourly wages. The surge in energy and other commodity prices has increased the pace of price inflation, wiping out the effects of the very slow rise in nominal earnings. The high jobless rate puts workers in a very weak bargaining position to demand better hourly pay. For that reason, we should probably anticipate that real earnings will continue to edge down so long as energy and food prices continue to surge.