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U.S. economy adds 288,000 jobs in April, but total labor pool shrinks

In this long slog of an economic recovery, even the best news comes with an asterisk.

New government data released yesterday showed that the U.S. job market sprang to life in April. Employers went on a hiring spree, and the jobless rate plunged to 6.3 percent – the lowest level since the darkest days of the financial crisis in 2008.

Now for the asterisk: The decline in unemployment was not from people finding jobs, but from a shrinking workforce. The Labor Department said many people who normally enter the job market this time of year – particularly high school and college students seeking summer jobs – simply did not show up.

Although the share of young people in the workforce has been dropping for decades as many opt to stay in school longer, the pace of the decline has picked up over the past year for reasons that experts say are still unclear.

“The job market is really hard these days, especially for young people, because we don’t have a degree yet,” said Ashley-Camille Jackson, a junior at Winston-Salem State University in North Carolina. “Right now, we’re competing against people who have one, two, three degrees.”

Still, many economists interpreted the data as a reassuring sign that the recovery has turned a corner since grinding to a halt over the winter. The economy added 288,000 jobs in April, the fastest pace of hiring in more than two years.

The construction industry provided one of the biggest boosts to job creation last month. The sector added 32,000 jobs, concentrated in heavy and civil engineering and residential building. Over the past year, the industry has hired 189,000 workers, with the bulk of those gains coming within the past six months.

The main hiring engine was the professional and business services sector, which created 75,000 net jobs. Retailers and bars and restaurants each added more than 30,000 jobs. The health care industry gained 19,000 positions.

“This is for real, we think,” said Eric Lascelles, chief economist at RBC Global Asset Management. “We can just expect further economic normalization.”

But for Jackson, 20, the past few months have been an agonizing limbo. She is waiting to find out whether she landed any of the paid summer internships in computer science for which she applied in the fall. She said the field is especially tough for women – Jackson is often one of a handful of females in her classes – but that she gives the guys a run for their money.

Still, Jackson is worried about her chances of landing a position because the number of slots is slim, and competition for them is fierce.

“Looking for a good job is really hard, and it takes a long time,” she said.

According to government data, the number of people younger than 25 in the workforce fell by 484,000 in April. The participation rate for teens ages 16 to 19 hit its second-lowest level ever. Overall, the nation’s workforce shrank by more than 800,000 workers last month. That sent the labor force participation rate plummeting 0.4 percentage points to 62.8 percent.

“I would actually say that this big drop in the unemployment rate is not consistent with a really robust labor market because that labor force participation rate did not rise, and the employment-to-population ratio is shockingly low,” said Tara Sinclair, an economics professor at George Washington University and an economist at Indeed.com, one of the nation’s largest sites for job postings.

Another factor contributing to the shrinking workforce could be the expiration of benefits for the long-term unemployed at the end of last year. To qualify for the payments, workers have to show they are looking for jobs. Without the incentive of unemployment benefits, many of them might have ended their searches.

The Senate voted in April to extend unemployment benefits through May for workers who have been out of a job for six months or longer, but the measure faces a rocky road in the Republican-led House.

Both parties quickly seized on yesterday’s jobs report, with each side adapting the data to its midterm elections messaging as Democrats and Republicans remain locked in a bitter battle over who will control the Senate next year.

Democrats accused Republicans of hurting those who remain jobless by refusing to pass a series of bills on paycheck fairness, extending unemployment benefits and raising the minimum wage.

“Congress must do more to create an economy that works for everyone, not just the wealthy,” House Minority Leader Nancy Pelosi, a California Democrat, said in a statement. “Unfortunately, Republicans continue to stand in the way.”

Meanwhile, congressional Republicans homed in on the shrinking workforce and said the recovery could accelerate if Senate Democrats would pass a series of jobs bills already approved in the House. The legislation includes tax cuts, as well as cuts or changes to the Affordable Care Act.

“House Republicans have made the people’s priorities our priorities, passing jobs bill after jobs bill to expand opportunity and economic security for middle-class families,” House Speaker John Boehner, an Ohio Republican, said in a statement.

The sharp drop in unemployment could also have implications for the Federal Reserve. On one hand, the pickup in hiring helps the Fed’s decision this week to continue scaling back support for the recovery. The nation’s central bank is reducing its monthly bond purchases by $10 billion to $45 billion – about half the amount it was pumping into the economy every month last year. The Fed has tied its stimulus to the health of the labor market, and yesterday’s data clearly show it is improving.

But several top officials have said they believe the nation’s central bank should raise its benchmark short-term interest rate for the first time since the recession once the jobless rate reaches about 6 percent. Now that moment could come sooner than they expected.

Seventeen-year-old Zuri Jordan of the District of Columbia also feels the clock ticking – but for a much different reason.

The senior at Woodrow Wilson High School has been trying to find a summer job before heading to college to study photography. She was hoping to avoid applying for jobs at a restaurant but is rethinking that decision as graduation looms.

“As it gets closer to the summer, it’s getting to the point where I’m down to do anything, work anywhere,” she said.

Jordan’s most promising lead was at the front desk of a yoga studio, but instead she was offered a volunteer position in exchange for free classes. She took it but still needs a way to make money.

“My mom would not allow me to sit back and relax,” Jordan said.

To say give business a tax cut and they "might" hire is a fool's bet. Business' hire due to demand of their product or service, not for a tax savings........ Giving the wealthy a tax cut creates no jobs because they already have enough money to buy whatever they want.

Raising taxes when the economy remains somewhat fragile would be a mistake when the economy has not fully taken off and that potentially you would see a lot of folks losing business, and more folks potentially losing jobs. President Obama 2010.

any more of this good economic news and we will have riots in the streets.

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