01.06.2012 News Releases, Policy Points

National Labor Market Improved In Dec.

CHAPEL HILL (January 6, 2011) – In December, the American economy gained 200,000 more payroll jobs than it lost. The private sector netted 212,000 positions, while the public sector shed 12,000 jobs, due overwhelmingly to payroll cuts on the part of local governments. Also, some 8.5 percent of the labor force was unemployed in December, and the underemployment rate totaled 15.2 percent. These findings come from today’s national employment report.

“The December employment report was one of the best of 2011,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Job growth outpaced the level needed to keep pace with the size of the working-age population and the unemployment rate fell to its lowest point of the year. Nevertheless, unemployment remains elevated for most every population group, and net job growth still is not robust enough to reverse that situation anytime soon.”

In December, the nation’s employers added 200,000 more payroll jobs than they cut. The private sector added 212,000 positions, but a net loss of 12,000 public-sector jobs erased 5.7 percent of that gain. Local government reductions (-14,000, due mainly to a loss of 9,400 local government education jobs) drove the public-sector decline. In recent months, public-sector cuts have weighed down job growth. Since December 2010, government payrolls have shed 280,000 positions (-1.3 percent). This drop offset 14.6 percent of the private-sector job growth that occurred during the same period.

Additionally, the payroll employment estimates for October and November underwent revisions. With the changes, the economy netted 212,000 jobs over those two months, not 220,000 positions as first reported.

Every major private-sector industry group posted net job growth in December. Trade, transportation, and utilities netted 90,000 positions with 31 percent of that growth occurring in the retail trade sub-sector (+27,900) and 46.7 percent in the courier and messenger sub-sector (+42,200). Education and health care services netted 29,000 positions. Manufacturing gained 23,000 positions, and leisure and hospitality services gained 21,000 positions, driven entirely by hiring in the accommodation and food services sub-sector (+24,700). Even construction netted 17,000 positions.

“Over the past year, net job growth has averaged almost 137,000 positions per month,” noted Quinterno. “This pace is grossly insufficient for replacing the jobs lost during the Great Recession. At this rate, it would take another 3.7 years to replace the 6.1 million jobs lost since December 2007. Even an average monthly gain of 200,000 jobs would not close the job gap until sometime in 2014.”

The inability of the current pace of job growth to alter fundamentally employment conditions was evident in the December household survey. Last month, 13.1 million Americans (8.5 percent of the labor force) were jobless and seeking work. While the unemployment rate and number of unemployed individuals dropped over the past year, the share of the population with a job remained stuck at a depressed level. In December, the share of the adult population that was employed (58.5 percent) remained near levels last seen in the early 1980s.

Another cause for concern is the fact that long-term unemployment remains elevated. Last month, 42.5 percent of all unemployed workers had been out of work for at least 27 weeks. A year ago, the comparable figure was 44.3 percent.

In December, proportionally more adult male workers were unemployed than female ones (8 percent vs. 7.9 percent). Similarly, unemployment rates were higher among Black (15.8 percent) and Hispanic workers (11 percent) than among White ones (7.5 percent). The unemployment rate among teenagers was 23.1 percent. Between November and December, the unemployment rate among adult men fell, but the rates for most every other major demographic group held steady.

Additionally, 7.7 percent of all veterans were unemployed in December. The unemployment rate among recent veterans (served after September 2001) was 13.1 percent.

“Jobs remained scarce in December,” added Quinterno. “This led some 50,000 individuals simply to abandon their job searches between November and December. In December, just 64 percent of the working-age population participated in the labor force, down from 64.3 percent a year ago.”

A more extensive measure of labor underutilization is the underemployment rate, which equaled 15.2 percent in December. Further evidence of the difficulty in finding a job is that, among unemployed workers, the average time out of work in December equaled 40.8 weeks, compared to 34.9 weeks a year ago.

“The American economy has succeeded in creating modest numbers of jobs over the past year, yet labor market conditions remain far from healthy. The December jobs report should not obscure the fact that the labor market is not recovering in ways likely to be perceptible to most workers anytime soon. Nothing in today’s report suggests that policymakers can declare ‘mission accomplished’ and turn away from the jobs crisis. ”

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