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Series: jobs
Brookings on Job Numbers

The Job Market Ekes Out Small Gains

Gary Burtless

Payroll employment improved slightly and the unemployment rate dipped in October, capping several months of modest gains in the job market.  The gain in payroll employment – 80,000 jobs – was disappointingly small, but upward revisions in the August and September payroll numbers boosted BLS’s previous estimates of job gains in late summer.  Between June and October payroll employment is now estimated to have increased about 117,000 jobs a month, slightly faster than the rate needed to keep the nation’s unemployment rate from rising.  The gains in private-sector payrolls were even faster – about 135,000 a month.

The BLS household survey offers an even rosier picture of recent job growth.  The number of adult Americans who report being employed increased 277,000 in October.  Over the four months ending in October adult employment rose 242,000 a month, substantially faster than the rate of increase needed to hold the unemployment rate constant.  Indeed, the unemployment rate has fallen 0.2 percentage points since June, edging down to 9.0% in October.  Thus, both the payroll employment statistics and the employment statistics derived from the household survey suggest that since the beginning of summer the job market has improved, although at a very slow pace given the huge gap between today’s GDP and the GDP we could produce at full employment.

As has been the case for almost two years, gains in private employment have been partly offset by losses in public employment, especially in state and local governments.  Estimated government payrolls fell 24,000 in October, and they have fallen about 18,000 a month since June.  Over that period the drop in government employment has offset about 13% of the payroll job gains that have occurred in the private sector.

The most recent jobs report contains a couple of pieces of encouraging news.  Employment in the temporary help services industry increased for the fourth successive month in October, rising 15,000 compared with September.  Employment in this industry often serves as an indicator of employers’ future hiring intentions, so the resumption of job growth in temporary help may be a signal that the recent growth in total payrolls will continue for a few more months. Job gains were also registered in education, health, and business and professional services.

The household survey showed a reduction in the number of long-term unemployed (people who have been looking for work for at least six months).  Though this number is somewhat volatile, there has been a noticeable downward trend since the end of last year.  The decline in the number of long-term unemployed and in the average duration of unemployment spells is encouraging, but it is unclear how much of the drop should be interpreted as good news.  Part of the change is explained by workers’ realization that their prospects of finding a job remain quite poor.  If jobless workers stop actively looking for work they are no longer counted as unemployed. They are counted instead as out the labor force. 

Since the end of the last economic expansion, in December 2007, the number of long-term unemployed has increased by more than 4.5 million.  In October almost 5.9 million unemployed workers had been jobless for six or more months.  At the current pace of economic growth it will take many years before this number falls back to its pre-recession level.  Even though the latest BLS report shows a job market that is improving faster than we thought early last summer, conditions are still improving too slowly to offer much relief to the long-term unemployed.

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