well that’s a lousy jobs report

Not a good release today from the Bureau of Labor Statistics….only 120,000 jobs added to the US economy in March (seasonally adjusted), well below expectations of 200,000+. In February the economy added 240,000 jobs.

Although the job numbers are hugely disappointing, they still are enough to keep pace with natural labor force growth. Indeed, the national unemployment rate actually dropped 0.1 percentage points in March. (More on why this is not that good of news below.)

Before diving into the data, a quick note in history. This day in 1896 marked the start of the first modern olympics, in Athens. In honor of that, let’s think about the economic recovery as a marathon, rather than a sprint. Unfortunately, this one has entered ultra-marathon territory.

In the following chart I show US monthly employment as a share of employment in December 2007 (the start of the recession). As you move to the right, you see how employment has changed each month relative to the pre-recessionary total. Currently, US total employment is about 96.3% of pre-recessionary totals (or down about 5.1 million jobs), 52 months after the start of the recession.

Although private sector employment is bouncing back, government employment is still declining relative to pre-recessionary levels (the spike was temporary hiring related to the 2010 Census). This is primarily due to layoffs at the state and local levels (including school districts), where borrowing to finance operating expenses is very difficult. (note: total = private + govt)

Goods-producing employment remains well below pre-recessionary levels, primarily reflecting the trials and tribulations of the construction sector. Service employment, conversely, is about 99% of pre-recessionary levels. (note: total = goods + service)

The steady but sporadic job growth over the past 2-years has knocked down the unemployment rate. Today it was announced at 8.2%–it peaked at 10% in October 2009.

But there is another reason that the unemployment rate has declined, and its not necessarily a good one. Specifically, unemployment rates can also decline when the labor force contracts (the labor force is those with a job and those looking for a job). If people give up looking for a job–the so-called discouraged workers–then the labor force gets smaller, knocking down the number officially unemployed. The recent jobs report indicates that 177,000 fewer women were in the labor force in March than a month earlier.

No one is exactly sure why they left in such large numbers, but I will speculate.

I think it is the persistent and sustained decline in government employment, a sector where women make up the majority of workers. As that sector contracts it offers fewer opportunities to women, so may no longer be viewed for some as a potential employer. I need to look more at the industry data to be sure of this story, but it’s one potential cause.

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