Hiring in U.S. Tapers Off as Economy Fails to Gain
Speed
Brendan Mcdermid/Reuters
A job fair in New York in late March for
former members of the military.
By CATHERINE RAMPELL
Published: April 5, 2013
It looks as if the spring swoon is back.
Multimedia
REACTIONS ON TWITTER
David
Leonhardt
And that's true -- slowest YOY job growth in 18
months -- no matter which of two surveys you look at.
Change in jobs,
in thousands
in thousands
Source: Bureau of Labor Statistics
Related
-
Sequestration and the Jobs Report (April 5, 2013)
-
The Shrinking Ranks of the Working (April 5, 2013)
American employers added an estimated 88,000 jobs to
their payrolls last month, compared with 268,000 in February, according to a Labor
Department report released Friday. It was the slowest pace of growth since
last June, and less than half of what economists had expected.
It also was the start of a third consecutive spring in
which employers tapered off their hiring after a healthy start to the year.
Slowdowns in the previous two years could be attributed to flare-ups in the European
debt crisis, but this time the cause is less obvious. The recent payroll
tax increase or other fiscal tightening in Washington could be partly to
blame for the sudden retreat in hiring, but neither seems to be showing up much
yet in other relevant economic data.
“People were starting to believe the economy was
really picking up steam, and desperately wanted this report to be better,” said
Joshua Shapiro, chief economist at MFR Inc. “But that didn’t happen.”
Economists like Mr. Shapiro cautioned that the
numbers, which are adjusted for normal seasonal variations, are volatile from
month to month and are still subject to revision.
Nonetheless, the closely watched monthly jobs report
was discouraging.
The unemployment rate, which comes from a different
survey, ticked down to 7.6 percent in March, from 7.7 percent, but for the wrong
reason: because more people reported dropping out of the labor force (meaning
they are neither working nor looking for work), not because more people were
hired.
The labor force participation rate has not been this
low — 63.3 percent — since 1979, a time when women were less likely to be
working.
Baby boomer retirements may account for part of the
slide, but pessimism about job prospects in a mediocre economy still seems to be
playing a large role, economists say.
“The drop in the participation rate has been centered
on younger workers,” said Mr. Shapiro, “many of whom have given up hope of
finding a decent job and are instead continuing in school and racking up
enormous amounts of student debt, which has contributed to the recent surge in
consumer credit outstanding.”
Investors initially responded to the jobs report by
sending the major stock market indexes down more than 1 percent. But as the day
went on, strategists sent out reports noting that the economic slowdowns in
previous years ended up being temporary. The Standard & Poor’s 500-stock
index climbed back to end the day down only 0.4 percent.
“Given the noise in the data you don’t want to set
your pants on fire about it,” said Michael Feroli, chief United States economist
at JPMorgan Chase.
Job gains in March were concentrated in professional
and business services and health care.
The government again shed workers, as it has been
doing for most of the last four years, though reductions at the Postal Service
accounted for most of the latest decline. Economists expect more government
layoffs in the months ahead as the effects of Washington’s across-the-board
budget cuts make their way through the system.
“While the recovery was gaining traction before
sequestration took effect, these arbitrary and unnecessary cuts to government
services will be a headwind in the months to come, and will cut key investments
in the nation’s future competitiveness,” Alan B. Krueger, the chairman of
President Obama’s Council of Economic Advisers, said in a statement.
The latest report should quiet speculation that the
Federal Reserve will take its foot off the monetary accelerator anytime soon, as
some had suggested after a spike in hiring in February. Even before Friday’s
numbers came out, though, Fed officials had expressed concerns about not only
the pace of job growth, but the quality of hiring as well.
“It’s important to look at the types of jobs that are
being created because those jobs will directly affect the fortunes and
challenges of households and neighborhoods as well as the course of the
recovery,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a
recent speech.
She noted that relatively low-wage sectors like food
services and retail businesses had accounted for a large share of the job growth
in the last few years; a
report in August from the National Employment Law Project, a liberal
advocacy group, found that a majority of jobs lost during the recent recession
were in the middle range of wages, while a majority of those added during the
recovery had been low-paying.
In March, in fact, jobs in food services and drinking
places accounted for the largest share of total American employment on record.
Today nearly one in 13 American jobs is in this industry.
Ms. Raskin also expressed concern about temporary
jobs, which account for a growing share of total employment.
“Temporary help is rapidly approaching a new record,”
said Diane Swonk, chief economist at Mesirow Financial, who noted that there was
also a rapid increase in temp hiring during the boom years of the 1990s. “That
of course means more flexibility for employers, and less job security for
workers.”
Perhaps more distressingly, 7.6 million workers who
want full-time work can find only part-time work, and their missing work hours
do not count toward the official unemployment rate. The number of such workers
fell slightly from February, but is still about where it was a year ago.
A broader measure of underemployment, which includes
those reluctantly working part time as well as those who want jobs but have
stopped looking, stands at 13.8 percent.
At the same time, long-term unemployment — joblessness
lasting more than six months — has been a persistent problem ever since the
recession ended in the middle of 2009. And it may be partly driven by the fact
that many of the jobs available do not pay well enough to be worth taking.
“When I’ve had offers for positions they’re part time
or temporary, but the child care I’d need to pay to take the jobs is more costly
than what I’d be getting paid for the job itself,” said Linda Rubiano, 37, of
Pennsauken, N.J., a single mother with a 3-year-old boy. She was laid off from
her paralegal job, which she had held for five years, in January 2012. “It’s
really, really frustrating.”
Getting people like Ms. Rubiano back to work soon is
critical to the economy’s future, experts say. In many cases, the longer people
stay unemployed, the less employable they become.
“This seems to be a long-term sleeper crisis too, as
we think about long-term unemployed workers who are in midlife and older workers
who are likely dipping into retirement savings in order to stay afloat,” said
Christine L. Owens, executive director of the National Employment Law Project.
“We’re setting ourselves up for somewhere, 10 years down the road, when a lot of
retirees who didn’t expect to live in poverty are going to be in poverty.”
A version of this article appeared in print on April 6, 2013, on page A1 of the New York edition with the headline: A Sharp Drop In Job Growth Sows Concern.
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