Economic Notes: Mess Hall Rations
5/10/2010
By Patrick O'Keefe, Director of Economic Research, J.H. Cohn
“The food is lousy and we don’t get enough.”
~Soldier’s Lament
The U.S. economy added jobs, yet more people were unemployed in April.
The pace of employment growth has been accelerating and its distribution broadening, according to the Bureau of Labor Statistics.
To be certain, the recent jobs gains are encouraging, but some perspective is advised.
Of the 520,000 jobs added in the past two months, about one-fifth were temporary hires by the Census Bureau. Had it not been for the decennial census, government employment would have fallen. And in a few months, as the Census Bureau’s temporary jobs end, the fiscally-impelled downward trend in government employment will resume.
Similarly, underemployment (i.e., involuntary part-time workers) has increased steadily since January – both absolutely and as a proportion of all workers. Indeed, the rise in involuntary part-timers accounted for almost three quarters (74.5%) of the total increase in employment.
Although part-time jobs are preferable to full-time unemployment, their continuing rise is an indication that employers remain tentative concerning the recovery’s strength. And that is why the jobs recovery is, to this point, meager by historic standards.
Despite the largest monthly jobs gain in four years, the unemployment rate rose in April as jobseekers entered the labor market in numbers unseen since 2003.
It was anticipated that in the recovery’s early phase the number of unemployed would increase as discouraged jobseekers reentered the labor market in pursuit of jobs. And, as expected, in the past two months, the number of discouraged jobseekers has fallen (-3.5%) while the number reentering the labor force jumped (+8.3%).
The willingness of the previously discouraged to renew their job search is a sign that households are increasingly optimistic about the economy’s outlook. This will continue to bolster consumer confidence and spending – depending, of course, on the timing and remuneration of the jobs reentrants acquire.
During 2008-2009, the economy shed jobs in all but one month. The U.S. lost 6.1% (8.4 million) of all of its jobs from peak to trough.
Thus far in the recovery, only 7% of the lost jobs have been replaced. As previously discussed, even under the best of circumstances, it will take years for the U.S. to regain its pre-recession employment levels.
In the interim, millions of workers will fail to realize their potential and, consequently, the economy will be less robust and incomes will be constrained.
April’s job growth is encouraging, at least by the standard of the past two years.
But by mess hall (i.e., historic) standards, it was lousy and we didn’t get enough.
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