Seasonally adjusted job-creation figures announced this morning by the Bureau of Labor Statistics showed a far weaker than expected gain of 36,000 nonfarm payroll jobs for January. This was much lower than the consensus of experts surveyed by Bloomberg last Friday and by Reuters and The Wall Street Journal. But the official unemployment rate – U3 – fell to 9 percent, making January the 21st month of joblessness at or above 9 percent, the longest period since records began in 1948.
The number of officially unemployed fell to 13.9 million. An alternative measure that includes the underemployed and a portion of discouraged workers fell to 16.1 percent. The labor force participation rate fell to 64.2 percent, its lowest level in nearly 27 years. The number of Americans without work for six months or more fell to 6.2 million. The employment-population ratio held steady at 58.4 percent.
Contrasted with what happened in January 2009, today's report showed vast improvement. Two years ago, 779,000 jobs were shed; last year the gain was just 14,000. But given that even at 200,000 jobs a month it would take until January 2014 to get us back to the pre-recession level of unemployment, today's report was devastatingly unimpressive. Once again, far, far away from Joe Biden's 500,000 jobs a month prediction made last spring.
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The disappointment was especially palpable to many analysts this morning because various other economic indicators during the past month - including improvements in manufacturing, service industries, retail trade, business investment, exports, personal consumption expenditures, on-line job postings - have exceeded expectations.
Some analysts believe that the government figures simply aren't catching new job creation as quickly as it is happening, especially in small business, and that these gains will show up as big numbers in job reports later this year. In that view, the government's methodology works well in stable periods but does poorly when the economy is falling into recession and when it is coming out of one.
Revisions for January raised the job gains in November from 71,000 reported last month to 93,000 and for December from 103,000 to 121,000.
Today's report also contained the annual benchmark adjustment. It subtracted another 378,000 jobs that had not been counted between April 2009 and March 2010. Last year, the adjustment subtracted 930,000 jobs. Add those two together and what do you get? The number of newly created jobs for the past 14 months. In other words, a wash.
Federal Reserve Chief Ben Bernanke said on Thursday at the National Press Club: “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established. It will be several years before the unemployment rate has returned to a more normal level.”
Weak (and contradictory) as the jobs report was, there's another problem for those who have managed to find work since the official end of the recession in June 2009: pay. Annette Bernhardt, policy co-director of the National Employment Law Project, recently conducted a study of job loss and growth. During the Great Recession, jobs were lost in high- middle- and low-wage categories. But in the first seven months of 2010, she found that 76 percent of the new jobs created were in low- to mid-wage industries – those in the $8.92 to $15 an hour range. The national average wage is $22.60 an hour. While high-wage jobs – those in the $17.43 to $31 an hour range made up half the jobs lost during the recession, they had only produced 5 percent of new jobs since hiring resumed last year:
Even in some of the higher-wage industries that are hiring, it's lower-wage occupations within the sector where the jobs are being added, according to William Rodgers, chief economist for the Heldrich Center for Workforce Development at Rutgers University.
Case in point: Professional and business services sectors gained a healthy 366,000 jobs in 2010. Workers in that sector earned $27.23 an hour, on average, in 2010. But almost all of the new jobs -- 308,000 -- came in temporary help services, where the average hourly wage was only $15 an hour.
But total pay at Wall Street firms rose 5.7 percent in 2010.
Bernhardt said this imbalance is far different than in previous recoveries, including the extremely weak recovery from the 2001 recession. She explains in more detail in this Wednesday clip on CNBC.
Among other statistics in today's report:
• Number of people working part time involuntarily (who would prefer full-time work): 8.4 million
• Individuals not in the labor force who wanted and were available for work and sought jobs in the past 12 months but not the past four weeks: 2.8 million
• Transportation and warehousing employment fell by 38,000
• Construction employment fell 32,000.
• Manufacturing employment rose 49,000.
• Employment in health care services rose 11,000.
• Health care employment rose 11,000
• Temporary employment in professional and business services fell 11,000
• Retail trade employment rose 28,000
• Average workweek for production and non-supervisory workers fell to 34.2 hours.
• Average workweek for production and non-supervisory employees on private nonfarm payrolls increased by 0.1 hour to 33.4 hours.
• Average hourly earnings for all employees on private
nonfarm payrolls increased by 8 cents, or 0.4 percent, to $22.86.