Jobs report paints a dreary picture
Poor job growth and a large exodus of unemployed workers last month stifled weeks of upbeat economic data and marked a sobering reality check, signaling that hiring was likely to remain weak in the coming months.
Employers added a paltry 88,000 net new jobs in March, the smallest number since June and just one-third of the gain in February.
Retailers, manufacturers and finance companies shed jobs over the month, an indication that consumer spending may be softening as workers grapple with higher payroll taxes and sluggish wage growth.
Normally such a weak job number would push up the jobless rate, but the unemployment figure fell a notch in March to 7.6% as hundreds of thousands of people left the labor force and were no longer counted as jobless.
In fact, the share of working-age Americans who have jobs or are looking for work sank to a 34-year low of 63.3% last month.
“It says job opportunities are so weak, hiring is so low and demand for workers is so depressed that we’re just having people drop out or otherwise not enter the labor force,” said Heidi Shierholz, an economist at the Economic Policy Institute in Washington.
President Obama’s chief economic advisor, Alan Krueger, suggested the automatic federal spending cuts under the so-called sequestration had already begun to hurt the job market, though there was little evidence of that in the March report. The federal government lost 14,000 jobs over the month, but almost all of those came at the U.S. Postal Service.
“While the recovery was gaining traction before sequestration took effect,” Krueger said, “these arbitrary and unnecessary cuts to government services will be a head wind in the months to come.”
He and other economists cautioned against reading too much into a single month’s data. The weather and other special factors may have affected the statistical calculations, analysts said, and the job numbers have bounced up and down in the past.
Yet even after averaging the last three months, the latest jobs report was a big disappointment.
Analysts had hoped that the economy was kicking into higher gear and they had forecast, on average, that 190,000 jobs would be created in March. On Friday, many were worrying out loud that the recovery may be reverting to its past pattern of slumping in the spring and summer.
Some economists predicted that job growth would now hover around 100,000 a month in the second quarter, down from an average of about 170,000 monthly in the first quarter and over the last year.
At that pace, it would barely be enough to keep up with the growing population, let alone absorb the nearly 12 million who are officially unemployed.
Other economists were more optimistic, noting that recent economic indicators showed the housing market growing again, business investment remaining solid and global economic prospects looking better than last year. In addition, some of the domestic political uncertainty has eased with the elections and fiscal cliff battles over.
Even so, these analysts were questioning their assumptions because the labor market has yet to feel the brunt of sequestration and the recent job-growth momentum is now lost.
“The job gain is not only smaller, it’s narrower,” said Patrick O’Keefe, a former Labor Department official who directs economic research for CohnReznick, an accounting and advisory firm in New York.
Earlier in the week, O’Keefe spoke encouragingly about how the job market had progressed from a crawl to a jog. On Friday, he said, “the jogger tripped on the curb.”
Among the positive details in Friday’s report, the construction industry hired more workers. Healthcare firms and restaurants continued to bulk up, and accounting businesses also added a healthy number of workers.
Overall, workers’ average weekly hours in the private sector rose slightly, but their average hourly earnings were essentially flat. The underemployment situation improved in March, but there were still 7.6 million part-time workers who wanted full-time work.
The disappointing jobs report made perfect sense to Marchella Hall of Hollywood. Early Friday morning, she was one of dozens of jobless workers who crowded into a federally funded labor resource center in downtown Los Angeles.
Once a casting agent who helped find actors for commercials, Hall, 43, said she has been unemployed almost continuously over the last three years, except for a brief stint as a telemarketer.
“I don’t want to blame it on the economy. I think we’re all responsible for our own luck, but it’s just been really hard,” Hall said, showing off a black binder bursting with resumes and applications she carried around everywhere. “I’m actually thinking of going back to school in my 40s. I never thought I would have to.”
Some workers have done just that, which may partly explain the big drop-off in the labor force. Composed of those who are working or looking for jobs, the labor force fell by nearly half a million people in March. Some of them probably included senior citizens who decided to retire, as well as discouraged workers who have given up job searches.
In addition, economists said, the shrinking labor force reflected the expiration of extended jobless benefits for many workers. People who draw unemployment checks are required to actively seek work, but budget cuts and the improved unemployment rates in many states have curtailed benefits that had once run as long as 99 weeks.
Many of these jobless workers would be looking for jobs had opportunities been strong. Shierholz, the economist, estimated about 4 million of those workers were “missing” from the nation’s labor force. If those workers were counted, she said, the unemployment rate would be 9.8% instead of 7.6%.
“The unemployment rate is currently hugely underestimating the amount of slack in the labor market,” she said.
The lackluster jobs report also didn’t come as a surprise to small employers such as Camille De Soto, owner of women’s clothing boutique Lady in Eagle Rock. She said business has been steady but hardly gangbusters in recent months. Lately, she said, her customers are not spending freely and continue to keep a tight rein on their wallets.
“Honestly, it’s not cost-effective for me to hire someone right now,” she said. “I have friends that help me out if I go out of town.”
The National Federation of Independent Business, a lobbying group for small employers, said its March survey found that fewer businesses were planning to create jobs.
“It seems that the stamina for growth is waning, even with decent reports on consumer spending,” said William Dunkelberg, the group’s chief economist.
The jobs report for California and other states usually lags behind the federal release by at least two weeks. California is likely to garner a disproportionately larger share of job gains in construction and leisure industries, said Dennis Meyers, an economist at the California Finance Department.
But overall, the national report isn’t a good omen for the state, he said. “It’s disappointing.”
