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The June 2010 employment report released this morning by the Bureau of Labor Statistics provides a
sobering snapshot of where we are now, two-and-a-half years since the start of the recession in
December 2007. Unemployment remains at a very high 9.5%. Nearly half (45.5%) of all unemployed
workers have been unemployed for over six months, and there are 25.8 million workers who are either
unemployed or underemployed. The labor force is actually smaller than when the recession started,
another indication of lost opportunities.
The unemployment rate declined 0.2 percentage points in June, but that was primarily due to a decline
in the labor force of 652,000 workers. If these workers had remained in the labor force and were
unemployed, the unemployment rate in June would have been 9.9%. The number of payroll jobs
declined by 125,000 in June, though the shedding of 225,000 temporary Census jobs more than
accounted for that loss. In order to get a handle on the fundamentals of the labor market this
summer, it is and will continue to be important to look at the payroll numbers excluding changes in
temporary Census employment. (The Census still has 339,000 temporary employees on its payroll,
which will also disappear by the end of the summer.)
Excluding changes in temporary Census hiring, the number of payroll jobs increased by 100,000 in
June. The private sector added 83,000 jobs, while state and local governments, their budgets
crunched, shed 10,000 jobs. The federal government (excluding changes in temporary Census jobs)
added 27,000 jobs.
Hours
The length of the average workweek decreased slightly in June, from 34.2 to 34.1 hours, another sign
of the weakness of the recovery. Average hours are, however, up from their low of 33.7 last fall. At
the start of the recession in December 2007, the length of the average workweek in the private sector
was 34.7 hours, so there is still a lot to make up. Simply restoring average hours worked by all 107.7
million private sector workers from 34.1 back to 34.7 would be the equivalent to adding 1.9 million
new jobs at current average hours. The restoration of average hours will therefore be an ongoing drag
on new hiring.
Wages
Another bad sign in today’s report is the fact that average hourly wages declined, from $22.55 to
$22.53 in June. Nominal hourly wage growth has been generally slowing since the summer of 2008
and remains low—wages grew at a 0.9% annualized rate over the last three months. They grew at
1.7% over the last year, slower than inflation (which was 2.0% from May 2009 to May 2010, the most
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recent data available), meaning real hourly wages have declined over the last year. After falling faster
than average hourly wage growth for the first year and a half of the recession, average weekly
earnings growth had seen some improvements since last summer, as average hours had been
improving. June’s decline in average hours meant weekly paychecks took a hit—after growing at a
4.9% annualized rate over the prior three months, average weekly paychecks declined at a 4.5%
annualized rate in June.
Long-term unemployment
The share of unemployed workers who have been unemployed for over six months dropped slightly
from 46.0% to 45.5%, though it remains the third-highest share on record, and there are still 6.8
million workers who have been unemployed for longer than six months. These figures are unsurprising
given that there remain five unemployed workers per job opening. The median, or typical,
unemployment spell rose from 23.2 to 25.5 weeks, and the average unemployment spell rose from
34.4 to 35.2 weeks. Both the median and average unemployment durations are record highs.
Underemployment
The “underemployment rate,” (or the U-6 measure of labor underutilization) is a more comprehensive
measure of labor market slack than the unemployment rate because underemployment includes not
just the officially unemployed, but also jobless workers who have given up looking for work and people
who want full-time jobs but have had to settle for part-time work (note, however, it does not include
people who are underemployed in the sense that they have had to take a job that is below their skills,
training, or experience level). This measure declined by 0.1 percentage point in June, despite an
increase of 321,000 in the number of “marginally attached” workers (jobless workers who have given
up looking for work), and remains at an extremely high 16.5%. In June, there were a total of 25.8
million workers who were either unemployed or underemployed.
Demographics
Demographic breakdowns show that while all major groups have experienced increased
unemployment in this downturn, some groups got hit particularly hard: racial and ethnic minorities,
young workers, men, and workers with lower levels of schooling. The table (below) shows
unemployment rates for various demographic groups at the start of the recession (December 2007), at
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the month of the peak unemployment rate in the current downturn so far (October 2009), and for the
current month (June 2010). Black workers currently have an unemployment rate of 15.4% and have
seen the least improvement since last fall. Older workers (age 55+) have seen the lowest
unemployment rates throughout the downturn, but almost all improvements since last fall have gone
to younger workers. Men saw much more dramatic increases in unemployment than women over the
downturn, and have also seen the lion’s share of the gains since last fall. Among education groups,
workers with a college degree or more have seen by far the lowest unemployment rates throughout
the downturn, but most improvements since last fall have gone to workers without a college degree.
Temporary help services added 21,000 jobs in June. In other words, roughly a quarter of the 83,000
private sector jobs added in June were temporary help jobs. Construction saw a loss of 22,000 jobs,
mostly in nonresidential. Manufacturing added 9,000 jobs, its sixth straight month of gains, though
lower than the average gain of the prior three months, which was 30,000. Retail trade lost 6,600 in
June, its second month of decline. Financial activities lost 15,000, with 6,500 of those lost in real
estate. Leisure and hospitality added 37,000 jobs in June, after adding an average of 17,000 for the
prior three months. These gains were mostly in entertainment and recreation, rather than
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accommodation and food services. Health care added 9,000 jobs in June, after adding an average of
20,000 for the prior three months.
Conclusion
With a deficit of 10.6 million jobs, a 9.5% unemployment rate, and the private sector not yet able to
provide a robust recovery, Congressional inaction in passing policies that support job creation and
economic growth, including renewing extended unemployment insurance and providing fiscal relief to
the states, is inexcusable.
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http://www.epi.org/publications/entry/job_creation_at_a_glacial_pace/ 7/6/2010