What the December jobs numbers mean

January 9, 2013 at 11:12 am 2 comments

Late last week, the Bureau of Labor Statistics released the Employment Situation Summary for December 2012, which provides the monthly changes in jobs and employment. It reported that in December, the U.S. economy added 155,000 jobs, primarily in health care, food services and drinking places, construction, and manufacturing.  The national unemployment rate held at 7.8 percent, where it has been since September 2012. The unemployment rate for adult women and African Americans, however, increased to 7.3 percent and 14.0 percent respectively.

Many were relieved by this news, as it appeared that the fiscal cliff and Hurricane Sandy did not deter hiring. Although there was some negative impact by the hurricane and the fiscal cliff drama, the 155,000 growth in jobs was still considered to be “healthy.” However, it is important to keep in mind that, although we are experiencing job growth, the effects of this recession have outlasted previous recessions and we have yet to reach our pre-recession employment levels. The more time goes by, the more our labor force grows, as more people graduate high school or college, immigrate to the US, and enter the labor force. At the same time, the longer people remain unemployed, many drop out of the labor force, which means that these disconnected workers are not factored in to our unemployment rate. Thus, the real picture of our economic health is more complicated than what the simple jobs numbers show.

Dissent has a good summary of how our current economic recovery compares to previous ones. What we should be looking at is our ‘jobs deficit’– the number of jobs lost since the recession, plus the number of jobs we need to be adding to keep up with the changing labor force. The Economic Policy Institute (EPI) estimates this to be 9 million jobs, and as Dissent notes at current rates it would take us eight years to get there. As we had blogged about in December, the jobs deficit in North Carolina was 550,600 as of October 2012. The chart below from EPI shows what the growth rate would need to be to keep up, compared to what job growth would look like at current rates.

The chart below adds some additional perspective by showing the recovery periods for the recessions since 1948. For a majority of these recoveries, the nation was able to achieve pre-recession employment levels within about two years. The current recession (the brown line) not only has a more sever drop, but we are also far below our pre-recession levels, more than 60 months out.

Although job growth is certainly a positive thing, it has to be looked at in context. The depth of the recession and its slow climb mean that we will not be back to a normal, healthy economy for some time yet. In addition, it’s important to remember that behind these numbers are people– workers who have been unemployed for months and years, families struggling to get by, college grads who are unable to start their careers, communities suffering from loss of wealth, etc. The combination of all these factors means that a simple increase in the number of jobs will not be enough. As stated in the Dissent article, “one step back from the monthly scoreboard-watching, the picture is not nearly as reassuring.”

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Entry filed under: Economic Development, Economy, Jobs & Employment. Tags: , , , .

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