WASHINGTON — The stagnant job growth that has plagued the American economy for more than three years is finally showing signs of easing, but it still could take years before the nation returns to the levels that preceded the economic collapse of 2008.
According to the U.S. Labor Department, the number of available jobs began to swell beginning in October 2010 but has finally started to grow at a more rapid rate over the past few months.
There were 1.9 million more jobs available in January than in June 2009 when the economic recovery unofficially began. A total of 3.7 million private sector jobs have been created over the last 23 months.
Bureau of Labor Statistics indicate the economy added 243,000 jobs in January, with the unemployment rate falling from 8.5 percent to 8.3 percent, the lowest level since February 2009. For the last three months, job creation has averaged 201,000 a month, an indication the labor market might finally be healing.
"We're seeing accelerated growth in our labor force across almost every industry," said Labor Secretary Hilda Solis.
"The manufacturing industry surged in January, adding 50,000 jobs. Over the past year, we've added 235,000 manufacturing jobs. More products are rolling off the assembly line marked 'Made in the USA.'"
Rea S. Hederman, Jr., assistant director of and research fellow in the Center for Data Analysis at the Heritage Foundation, a conservative think tank, acknowledged recent numbers show "the labor market recovery may be truly under way."
"The January report is one of the strongest reports since last spring," Hederman said. "Even better news is that there is now a three-month trend of job growth exceeding 150,000 jobs. It looks like the labor market recovery is strengthening."
But there also are signs the job recovery isn't as strong as some of those bare numbers might indicate. Hederman and James Sherk, a senior policy analyst in Labor Economics in the Center for Data Analysis, found the recovery "is still too weak for where it should be in this business cycle" where the stock market has made significant gains.
And there are fewer people looking for work, a factor that helps reduce the unemployment rate because those who aren't searching for work don't count as unemployed.
The most recent figures show only 63.7 percent of adult Americans are active in the labor force — the lowest since 1983, a time when far fewer women worked.
Hederman and Sherk said workforce participation peaked in 2000 and began a gradual decline as the oldest members of the baby boomers began to retire. But since the beginning of the recession in 2008, participation rates have dropped by 2.3 percent, higher than retirement figures can explain.
The Congressional Budget Office estimates the unemployment rate would be 1.25 points higher if labor force participation had not unexpectedly declined.
The budget office estimates that although the participation rate will stabilize in the near future, it will continue to decline as boomers retire.
Those numbers tended to moderate the enthusiasm of Indiana's 8th District Rep. Larry Bucshon, who said the time has come for President Obama "to provide leadership, not lip service, and finally focus on producing jobs for Americans in need."
"Even though the unemployment rate fell to 8.3 percent, the true story should be that millions of Americans are choosing to give up on their search for work altogether as the labor market contracted to its lowest level in 30 years," said the Newburgh Republican.
"We cannot truly recover from this economic downturn until we can end this exodus from the labor force and get the private sector economy expanding and creating jobs."
The Bureau of Labor Statistics shows the civilian labor force grew by 7.9 percent — from 142.6 million to 153.9 million — from 2000 to 2010. Meanwhile, employment by major industry declined during the same period by more than 3 million jobs: from 146.2 million to 143.1 million.
But the future is looking a bit brighter. The bureau estimates employment by major industry from 2010 to 2020 will grow by 20.5 million jobs, to 163.5 million. The civilian labor force is expected to grow at a slower pace than it did during the previous 10 years, hitting 164.4 million in 2020.
John Schmitt, senior economist at the Center for Economic and Policy Research, noted though the acceleration in job creation is welcome, it is still slow by any reasonable benchmark. While unemployment has dropped in recent months, it remains high by historical standards.
In the period after World War II, excluding the current downturn, only three years showed an annual unemployment rate above the current 8.3 percent level. At no time in the postwar period has the unemployment rate been this high more than two and a half years into an economic recovery.
"We still have about 5.5 million fewer jobs today than we did in December 2007, when the recession began," Schmitt said. "At the average rate of job creation achieved over the last three months, it would still take more than two years to get back to where we were before the recession got under way.
But the task is even more daunting because each month, demographic forces increase the size of the labor force by at least 90,000 new potential workers."
At the current pace, Schmitt said, a return to the 2007 unemployment rate is unlikely to occur before 2019.
Regardless, Schmitt said, the labor market "is in a stronger position now than at any time in the last four years." If overall job growth continues at about 200,000 jobs per month, which is the average over the past three months, the economy will have 2 million more jobs in November than has today.
If the unemployment rate continues to fall at the pace that it has since August 2011 — a decline of 0.8 percentage points in five months — the unemployment rate would hit 6.7 percent by November.
"Of course, simple extrapolations are not careful forecasts, and more formal analysis, including those made by Council of Economic Advisers, put the unemployment rate at the end of this year in the range of 8 percent," he said.
Schmitt credits The American Recovery and Reinvestment Act of 2009, the stimulus legislation championed by President Obama, with playing "an important role in righting the economy after the crash in the housing bubble triggered a recession and a full-scale financial panic."
The Congressional Budget Office determined the legislation was responsible for saving or creating between 1.3 million and 3.3 million jobs in 2010 and 900,000 and 2.7 million jobs in 2011. This year, even as the stimulus spending phases out, the Congressional Budget Office projects it will increase employment by 400,000 to 1.1 million jobs.
"Subsequent federal measures, including the extension of unemployment insurance and the temporary reduction in the payroll tax, have also had a positive effect on job creation by sustaining flagging consumer demand," Schmitt said.
Michael Linden, director for Tax and Budget Policy at the Center for American Progress, a liberal think tank, agrees. Throughout 2006 and 2007, when the economy was growing at a respectable pace, the U.S. was adding about 130,000 jobs a month.
But things started slowing down at the end of 2007 and worsened dramatically during the second half of 2008. As the economy contracted, private companies started laying people off in greater numbers — the private sector laid off 600,000 more people in December 2008 than it had eight months earlier.
By the time President Obama assumed office in January 2009 the economy was in free fall: The country was losing more jobs in one month that it had in any single month over the previous 60 years.
"Now here's what happened after the stimulus began," Linden said. "Job losses begin to slow down immediately. Leading up to the stimulus, we were losing more and more jobs each month.
After the stimulus, fewer and fewer. And eventually we even start gaining jobs. And take a look at this. Private-sector layoffs actually peak in February 2009 — the month the stimulus passed — and then begin a dramatic decline. By the one-year anniversary of the stimulus, private-sector layoffs are back down to pre-recession levels."
But critics of the administration's policies insist the stimulus efforts did more harm than good.
"The grand promises of the Obama stimulus plan failed to come true and today our economy is in worse shape than when the president took office" said Indiana U.S. Sen. Dan Coats, a Republican.
"Washington borrowed nearly $1 trillion to try to create economic growth, but instead our economy lost over 1 million jobs.
Despite the administration's vow to reduce unemployment rates, millions of Americans are waking up every day without a job and many have given up looking for work entirely. For the past three years, we have seen that more spending, more taxing and more regulating does not generate economic growth."
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According to the U.S. Labor Department, the number of available jobs began to swell beginning in October 2010 but has finally started to grow at a more rapid rate over the past few months.
There were 1.9 million more jobs available in January than in June 2009 when the economic recovery unofficially began. A total of 3.7 million private sector jobs have been created over the last 23 months.
Bureau of Labor Statistics indicate the economy added 243,000 jobs in January, with the unemployment rate falling from 8.5 percent to 8.3 percent, the lowest level since February 2009. For the last three months, job creation has averaged 201,000 a month, an indication the labor market might finally be healing.
"We're seeing accelerated growth in our labor force across almost every industry," said Labor Secretary Hilda Solis.
"The manufacturing industry surged in January, adding 50,000 jobs. Over the past year, we've added 235,000 manufacturing jobs. More products are rolling off the assembly line marked 'Made in the USA.'"
Rea S. Hederman, Jr., assistant director of and research fellow in the Center for Data Analysis at the Heritage Foundation, a conservative think tank, acknowledged recent numbers show "the labor market recovery may be truly under way."
"The January report is one of the strongest reports since last spring," Hederman said. "Even better news is that there is now a three-month trend of job growth exceeding 150,000 jobs. It looks like the labor market recovery is strengthening."
But there also are signs the job recovery isn't as strong as some of those bare numbers might indicate. Hederman and James Sherk, a senior policy analyst in Labor Economics in the Center for Data Analysis, found the recovery "is still too weak for where it should be in this business cycle" where the stock market has made significant gains.
And there are fewer people looking for work, a factor that helps reduce the unemployment rate because those who aren't searching for work don't count as unemployed.
The most recent figures show only 63.7 percent of adult Americans are active in the labor force — the lowest since 1983, a time when far fewer women worked.
Hederman and Sherk said workforce participation peaked in 2000 and began a gradual decline as the oldest members of the baby boomers began to retire. But since the beginning of the recession in 2008, participation rates have dropped by 2.3 percent, higher than retirement figures can explain.
The Congressional Budget Office estimates the unemployment rate would be 1.25 points higher if labor force participation had not unexpectedly declined.
The budget office estimates that although the participation rate will stabilize in the near future, it will continue to decline as boomers retire.
Those numbers tended to moderate the enthusiasm of Indiana's 8th District Rep. Larry Bucshon, who said the time has come for President Obama "to provide leadership, not lip service, and finally focus on producing jobs for Americans in need."
"Even though the unemployment rate fell to 8.3 percent, the true story should be that millions of Americans are choosing to give up on their search for work altogether as the labor market contracted to its lowest level in 30 years," said the Newburgh Republican.
"We cannot truly recover from this economic downturn until we can end this exodus from the labor force and get the private sector economy expanding and creating jobs."
The Bureau of Labor Statistics shows the civilian labor force grew by 7.9 percent — from 142.6 million to 153.9 million — from 2000 to 2010. Meanwhile, employment by major industry declined during the same period by more than 3 million jobs: from 146.2 million to 143.1 million.
But the future is looking a bit brighter. The bureau estimates employment by major industry from 2010 to 2020 will grow by 20.5 million jobs, to 163.5 million. The civilian labor force is expected to grow at a slower pace than it did during the previous 10 years, hitting 164.4 million in 2020.
John Schmitt, senior economist at the Center for Economic and Policy Research, noted though the acceleration in job creation is welcome, it is still slow by any reasonable benchmark. While unemployment has dropped in recent months, it remains high by historical standards.
In the period after World War II, excluding the current downturn, only three years showed an annual unemployment rate above the current 8.3 percent level. At no time in the postwar period has the unemployment rate been this high more than two and a half years into an economic recovery.
"We still have about 5.5 million fewer jobs today than we did in December 2007, when the recession began," Schmitt said. "At the average rate of job creation achieved over the last three months, it would still take more than two years to get back to where we were before the recession got under way.
But the task is even more daunting because each month, demographic forces increase the size of the labor force by at least 90,000 new potential workers."
At the current pace, Schmitt said, a return to the 2007 unemployment rate is unlikely to occur before 2019.
Regardless, Schmitt said, the labor market "is in a stronger position now than at any time in the last four years." If overall job growth continues at about 200,000 jobs per month, which is the average over the past three months, the economy will have 2 million more jobs in November than has today.
If the unemployment rate continues to fall at the pace that it has since August 2011 — a decline of 0.8 percentage points in five months — the unemployment rate would hit 6.7 percent by November.
"Of course, simple extrapolations are not careful forecasts, and more formal analysis, including those made by Council of Economic Advisers, put the unemployment rate at the end of this year in the range of 8 percent," he said.
Schmitt credits The American Recovery and Reinvestment Act of 2009, the stimulus legislation championed by President Obama, with playing "an important role in righting the economy after the crash in the housing bubble triggered a recession and a full-scale financial panic."
The Congressional Budget Office determined the legislation was responsible for saving or creating between 1.3 million and 3.3 million jobs in 2010 and 900,000 and 2.7 million jobs in 2011. This year, even as the stimulus spending phases out, the Congressional Budget Office projects it will increase employment by 400,000 to 1.1 million jobs.
"Subsequent federal measures, including the extension of unemployment insurance and the temporary reduction in the payroll tax, have also had a positive effect on job creation by sustaining flagging consumer demand," Schmitt said.
Michael Linden, director for Tax and Budget Policy at the Center for American Progress, a liberal think tank, agrees. Throughout 2006 and 2007, when the economy was growing at a respectable pace, the U.S. was adding about 130,000 jobs a month.
But things started slowing down at the end of 2007 and worsened dramatically during the second half of 2008. As the economy contracted, private companies started laying people off in greater numbers — the private sector laid off 600,000 more people in December 2008 than it had eight months earlier.
By the time President Obama assumed office in January 2009 the economy was in free fall: The country was losing more jobs in one month that it had in any single month over the previous 60 years.
"Now here's what happened after the stimulus began," Linden said. "Job losses begin to slow down immediately. Leading up to the stimulus, we were losing more and more jobs each month.
After the stimulus, fewer and fewer. And eventually we even start gaining jobs. And take a look at this. Private-sector layoffs actually peak in February 2009 — the month the stimulus passed — and then begin a dramatic decline. By the one-year anniversary of the stimulus, private-sector layoffs are back down to pre-recession levels."
But critics of the administration's policies insist the stimulus efforts did more harm than good.
"The grand promises of the Obama stimulus plan failed to come true and today our economy is in worse shape than when the president took office" said Indiana U.S. Sen. Dan Coats, a Republican.
"Washington borrowed nearly $1 trillion to try to create economic growth, but instead our economy lost over 1 million jobs.
Despite the administration's vow to reduce unemployment rates, millions of Americans are waking up every day without a job and many have given up looking for work entirely. For the past three years, we have seen that more spending, more taxing and more regulating does not generate economic growth."
courierpress.com
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