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Jobs Are Trickling In, But Millions Have
Given Up Looking For Work
First Posted: 01- 3-11 07:58 AM |
Updated: 01- 3-11 07:58 AM
U.S. private employers have recorded 11 consecutive months of job gains,
yet the number of people who are so discouraged that they have given up
searching for work stands at an all-time high.
Friday's employment report is expected to show the pace of payroll growth
accelerated last month after a disappointing showing in November. However,
consumers' assessment of the job market deteriorated in December,
according to the Conference Board's latest consumer confidence survey.
This disconnect is symptomatic of the state of the labor market. Yes, it is
recovering, but at a pace that can hardly keep up with population growth,
let alone quickly bring down the 9.8 percent unemployment rate.
Private employment increased by an average of 106,000 per month
through November. At that rate, it would take more than 6 years just
to replace the jobs lost during the latest recession.
There is reason to believe hiring will pick up in 2011.
Many economists have raised economic growth forecasts, in part
because of a tax deal that keeps in place lower rates enacted under
President George W. Bush, and planned job cuts are down
60 percent from a year ago.
However, that may not make job hunting much easier,
said John Challenger, chief executive of job placement
firm Challenger, Gray & Christmas in Chicago.
"The job market could be even more competitive as
improving job prospects entice people who abandoned
their job searches out of frustration to re-enter the labor pool," he said.
The labor pool looks like it has sprung a leak. In a civilian labor
force 154-million strong, only 64.5 percent were either working
or looking for a job in November, a rate that matched October
as the lowest since the early 1980s.
If workers come pouring back into the labor market more quickly
than employers want to hire, the jobless rate will rise.
The Labor Department counts people as unemployed only
if they are actively looking for work, so those discouraged
workers -- nearly 1.3 million of them as of November -- are excluded.
A look at the gender breakdown offers some signs that the
dropout rate could stay high even if hiring improves.
Nearly two-thirds of the discouraged workers were men,
perhaps a reflection of sharp declines in male-dominated
industries such as construction and manufacturing, where
jobs are expected to remain scarce.
Ethan Harris, an economist with Bank of America-Merrill Lynch,
said the economic healing process will be faster for women than
for men, in part because women are more likely to go to college
and obtain the skills needed to find a job.
Among 18- to 24-year-olds, about 41 percent were enrolled in
college or graduate school, according to Census data.
Broken down by gender, 45.3 percent of women in that age
group were enrolled, compared with just 36.7 percent of men.
STALL SPEED
The slow-healing labor market arguably poses the biggest
threat to U.S. economic recovery and the biggest headache
for Federal Reserve Chairman Ben Bernanke.
Bernanke said in early December it would take four to five
years for the unemployment rate to come down to what he
called more "normal" levels of around 5 percent to 6 percent.
He is scheduled to testify on monetary and fiscal policy before
the Senate Budget Committee on Friday, one hour after the
employment report is released. He no doubt will face questions
on what more can be done to speed up the recovery.
Bernanke and his fellow Fed officials think economic growth
will come in around 3 percent to 3.6 percent in 2011,
which would be a step up from 2010's expected 2.6 percent rate.
Andrew Busch, a currency and public policy strategist at
BMO Capital Markets, said he remains optimistic about the
U.S. economy's 2011 prospects. But he also has compiled a
list of reasons why growth might fall short of expectations.
The potential trouble spots include a renewed housing slump,
tax hikes from budget-pinched states and a congressional
battle over whether to raise the debt ceiling to allow the
Treasury Department to borrow more.
Busch's biggest concern is that the economy manages
just 2.5 percent economic growth, too slow to spur much
hiring, triggering a Japan-esque deflation cycle.
"If you hit stall speed at 2.5 percent (growth),
you've got a major problem," Busch said.
Given Up Looking For Work
First Posted: 01- 3-11 07:58 AM |
Updated: 01- 3-11 07:58 AM
U.S. private employers have recorded 11 consecutive months of job gains,
yet the number of people who are so discouraged that they have given up
searching for work stands at an all-time high.
Friday's employment report is expected to show the pace of payroll growth
accelerated last month after a disappointing showing in November. However,
consumers' assessment of the job market deteriorated in December,
according to the Conference Board's latest consumer confidence survey.
This disconnect is symptomatic of the state of the labor market. Yes, it is
recovering, but at a pace that can hardly keep up with population growth,
let alone quickly bring down the 9.8 percent unemployment rate.
Private employment increased by an average of 106,000 per month
through November. At that rate, it would take more than 6 years just
to replace the jobs lost during the latest recession.
There is reason to believe hiring will pick up in 2011.
Many economists have raised economic growth forecasts, in part
because of a tax deal that keeps in place lower rates enacted under
President George W. Bush, and planned job cuts are down
60 percent from a year ago.
However, that may not make job hunting much easier,
said John Challenger, chief executive of job placement
firm Challenger, Gray & Christmas in Chicago.
"The job market could be even more competitive as
improving job prospects entice people who abandoned
their job searches out of frustration to re-enter the labor pool," he said.
The labor pool looks like it has sprung a leak. In a civilian labor
force 154-million strong, only 64.5 percent were either working
or looking for a job in November, a rate that matched October
as the lowest since the early 1980s.
If workers come pouring back into the labor market more quickly
than employers want to hire, the jobless rate will rise.
The Labor Department counts people as unemployed only
if they are actively looking for work, so those discouraged
workers -- nearly 1.3 million of them as of November -- are excluded.
A look at the gender breakdown offers some signs that the
dropout rate could stay high even if hiring improves.
Nearly two-thirds of the discouraged workers were men,
perhaps a reflection of sharp declines in male-dominated
industries such as construction and manufacturing, where
jobs are expected to remain scarce.
Ethan Harris, an economist with Bank of America-Merrill Lynch,
said the economic healing process will be faster for women than
for men, in part because women are more likely to go to college
and obtain the skills needed to find a job.
Among 18- to 24-year-olds, about 41 percent were enrolled in
college or graduate school, according to Census data.
Broken down by gender, 45.3 percent of women in that age
group were enrolled, compared with just 36.7 percent of men.
STALL SPEED
The slow-healing labor market arguably poses the biggest
threat to U.S. economic recovery and the biggest headache
for Federal Reserve Chairman Ben Bernanke.
Bernanke said in early December it would take four to five
years for the unemployment rate to come down to what he
called more "normal" levels of around 5 percent to 6 percent.
He is scheduled to testify on monetary and fiscal policy before
the Senate Budget Committee on Friday, one hour after the
employment report is released. He no doubt will face questions
on what more can be done to speed up the recovery.
Bernanke and his fellow Fed officials think economic growth
will come in around 3 percent to 3.6 percent in 2011,
which would be a step up from 2010's expected 2.6 percent rate.
Andrew Busch, a currency and public policy strategist at
BMO Capital Markets, said he remains optimistic about the
U.S. economy's 2011 prospects. But he also has compiled a
list of reasons why growth might fall short of expectations.
The potential trouble spots include a renewed housing slump,
tax hikes from budget-pinched states and a congressional
battle over whether to raise the debt ceiling to allow the
Treasury Department to borrow more.
Busch's biggest concern is that the economy manages
just 2.5 percent economic growth, too slow to spur much
hiring, triggering a Japan-esque deflation cycle.
"If you hit stall speed at 2.5 percent (growth),
you've got a major problem," Busch said.
