04.05.2013 News Releases, Policy Points

National Labor Market Stumbled In March

The national labor market added in March just 88,000 more jobs than it lost in March. The unemployment rate, meanwhile, dipped to 7.6 percent, due in part to a contraction in the size of the labor force. Despite some improvements in certain key indicators in recent months, unemployment and underemployment remain elevated.

“March was the 30th-straight month of job growth recorded in the United States,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Over the past three months, the national economy has netted an average of 168,000 jobs, a pace that, while positive, is insufficient to drive unemployment down to pre-recessionary levels. More than 3.5 years into a recovery, the unemployment rate remains well above the December 2007 level of 5 percent.”

In March, the nation’s employers added 88,000 more payroll positions than they cut. Gains occurred entirely in the private sector (+95,000), while government employers eliminated 7,000 more positions than they added, owing chiefly to reductions by the US Postal Service. Moreover, the payroll employment numbers for January and February underwent revisions; with the updates, the economy gained 416,000 jobs over those two months, not the 355,000 positions previously reported.

Within the private sector, payroll levels rose the most in the professional and business services sector (+51,000, with half of the gain attributable to the administrative and waste services subsector), followed by education and health services sector (+44,000, with 53.2 percent of the gain attributable to the health care subsector), the construction sector (+18,000), and the leisure and hospitality sector (+17,000, with 71.6 percent of the gain occurring in the accommodation and food services subsector). Payroll levels fell the most in the trade, transportation, and utilities sector (-27,000, with 89.3 percent of the losses originating in the retail trade subsector).

“Over the last year, the American economy has gained 1.9 million more payroll positions that it has lost,” noted Quinterno. “The current average monthly rate of job growth—some 159,000 positions per month—nevertheless is insufficient to fill the sizable jobs gap caused by the most recent recession.”

Slack labor market conditions were evident in the March household survey. Last month, 11.7 million Americans (7.6 percent of the labor force) were jobless and seeking work. While the unemployment rate dropped between February and March, that was due in part to a large contraction in the size of the labor force (-496,000 persons). Also in March, the share of the population participating in the labor force fell to 63.3 percent, a rate lower than the one recorded a year ago. On a somewhat positive note, more Americans were working in March compared to a year ago, while fewer persons were unemployed. At the same time, the share of the working age population with a job fell in March to a level close to the lowest one recorded during the current business cycle.

Last month, the unemployment rate was higher among adult female workers than male ones (7 percent versus 6.9 percent). Unemployment rates were higher among Black (13.3 percent) and Hispanic workers (9.2 percent) than among White ones (6.7 percent). The unemployment rate among teenagers was 24.2 percent. Moreover, 7.1 percent of all veterans were unemployed; the rate among recent veterans (served after September 2001) was 9.2 percent. At the same time, 13 percent of Americans with disabilities were jobless and seeking work (not seasonally adjusted).

Jobs remained scarce in March. Last month, the underemployment rate equaled 13.8 percent. Among unemployed workers, 39.6 percent had been jobless for at least six months, and the average spell of unemployment was 37.1 weeks. The leading cause of unemployment remained a job loss or the completion of a temporary job, which was the reason cited by 53.6 percent of unemployed persons in March. Another 26.9 percent of unemployed persons were reentrants to the labor market, while 11.1 percent were new entrants. Voluntary job leavers accounted for the remaining 8.4 percent of the total.

“In March, the air very much leaked out of the American job market,” observed Quinterno. “The monthly job gain was the smallest recorded since last June, and the economy still is not adding jobs fast enough to accommodate all the Americans who need work. And while the unemployment rate fell, that drop was due to people leaving the job market altogether.”

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