08.02.2013 News Releases, Policy Points

National Labor Market Sagged In July

CHAPEL HILL, NC (August 2, 2013) – The national labor market added in July 162,000 more jobs than it lost. While the unemployment rate and number of unemployed persons fell over the month, joblessness remained pervasive throughout the country. Last month, 11.5 million Americans were unemployed, while 8.2 million individuals worked part time despite preferring full-time positions. Another 988,000 individuals (not seasonally adjusted) were so discouraged about their job prospects that they had stopped searching for work altogether.

“July was the 34th-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 year, the national economy netted an average of 190,000 jobs per month, a pace that, while positive, is insufficient to drive unemployment down to pre-recessionary levels. The pace of growth slowed sharply during the past three months, falling to an average monthly net gain of 175,000 jobs, compared to an average of 224,000 jobs per month during the prior three-month period.”

In July, the nation’s employers added 162,000 more payroll positions than they cut. Gains occurred almost entirely in the private sector (+161,000), while government employers added 1,000 more positions than they eliminated. Furthermore, the payroll employment numbers for May and June underwent negative revisions; with the updates, the economy gained 364,000 jobs over those two months, not the 390,000 positions previously reported.

Within the private sector, payroll levels rose the most in the trade, transportation, and utilities sector (+63,000, with 74.3 percent of the gains occurring in the retail trade subsector), followed by the professional and business services sector (+36,000, with 58.6 percent of the gain occurring in the professional and technical services subsector) and the leisure and hospitality services sector (+23,000, with all of the gain attributable to the accommodation and food services subsector). Payroll levels fell the most in the construction and other services sectors (-6,000 and -2,000, respectively).

“Since last July, the American economy has gained 2.3 million more payroll positions that it has lost,” noted Quinterno. “The current average monthly rate of job growth—some 190,000 positions per month—is insufficient to close the nation’s sizable jobs gap anytime soon.”

Slack labor market conditions were evident in the July household survey. Last month, 11.5 million Americans (7.4 percent of the labor force) were jobless and seeking work. Both the unemployment rate and total number of unemployed persons were lower when compared to the prior month. In July, the share of the population participating in the labor force was essentially unchanged at 63.4 percent, a rate lower than the one posted a year ago. On a positive note, more Americans were working in July compared to a year earlier, and fewer persons were unemployed. At the same time, the share of the working-age population with a job remained near the lowest figure recorded during the current business cycle.

Last month, the unemployment rate was higher among adult male workers than female ones (7 percent versus 6.5 percent). Unemployment rates were higher among Black (12.6 percent) and Hispanic workers (9.4 percent) than among white ones (6.6 percent). The unemployment rate among teenagers was 23.7 percent. Moreover, 6.4 percent of all veterans were unemployed; the rate among recent veterans (served after September 2001) was 7.7 percent. At the same time, 14.7 percent of Americans with disabilities were jobless and seeking work (not seasonally adjusted).

Jobs remained hard to find in July. Last month, the underemployment rate equaled 14 percent. Not only were 11.5 million Americans unemployed, but 8.2 million people held part-time jobs despite preferring full-time work; while another 988,000 individuals (not seasonally adjusted) were so discouraged about the labor market that they had stopped searching for work. Among unemployed workers, 37 percent had been jobless for at least six months, and the average spell of unemployment lasted 36.6 weeks. The leading cause of unemployment remained a job loss or the completion of a temporary job, which was the reason cited by 51.9 percent of unemployed persons. Another 28.5 percent of unemployed persons were re-entrants to the labor market, while 11 percent were new entrants. Voluntary job leavers accounted for the remaining 8.6 percent of the total.

“The July employment report provided additional evidence of a sagging labor market,” observed Quinterno. “Job growth slowed and underemployment remained elevated. Despite the drop in the unemployment rate to the lowest level recorded since November 2008, joblessness and the associated hardships remain pervasive throughout the United States.”

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