WASHINGTON – Just how sturdy is the U.S. job market?
That’s the key question the Federal Reserve will face when it decides later this month whether to reduce its economic stimulus. The answer depends on where you look. The economy has added jobs for 35 straight months. Unemployment has reached a 4½-year low of 7.3 percent. Layoffs are dwindling.
Yet other barometers of the job market point to chronic weakness. Here’s a look at the job market’s vital signs as the Fed’s decision nears:
The unemployment rate slid in August to 7.3 percent, its lowest level since December 2008. Unemployment had peaked in October 2009 at 10 percent and has since fallen more or less steadily. Since then, the number of people who say they have jobs has risen by 5.7 million. And the number of those who say they’re unemployed has dropped by nearly 4.1 million.
But the rate has been falling, in part, for a bad reason: People are dropping out of the labor force. Once people without a job stop looking for one, the government no longer counts them as unemployed.
Since the Great Recession officially ended in June 2009, the American economy has added nearly 5.6 million jobs. Yet that hasn’t been nearly enough to fill the hole left by the recession. The United States still has 1.9 million fewer jobs than the 138 million it had when the recession officially began in December 2007.
But job creation seems to be slowing. From January through April this year, employers added a robust 205,000 jobs a month. In the four months since, they’ve added only 155,000.
The jobs the economy is generating this year have tended to be low-paying, part-time or both. More than 45 percent of the 1.44 million jobs added this year come from three generally low-paying industries: department stores and other retailers; hotels and restaurants; and temporary services.
And nearly 60 percent of the jobs added this year have been part-time, though economists caution that the part-time employment figures are volatile.
The lower quality of the available jobs is one reason pay has stagnated. The average hourly earnings of private-sector employers haven’t kept up with inflation since the end of the recession.
“More and more, America’s jobs are not supporting America’s families,” said Christine Owens, executive director of the National Employment Law Project, which advocates on behalf of low-wage workers.
LAYOFFS AND HIRING
The American labor market is divided between haves and have-nots. If you have a job, your position is safer than it’s been in years. If you don’t have one and aren’t willing to settle for lower-wage work, the job search can be brutal.
Layoffs are averaging just over 1.6 million a month this year through June. That means the United States this year is on pace to have the fewest layoffs in Labor Department records dating to 2001.
The drop in layoffs has sharply reduced the number of Americans applying for unemployment benefits. Over the past month, weekly applications have fallen to their lowest level since October 2007 — two months before the official start of the recession.
Yet while companies aren’t cutting many jobs, they’re in no hurry to hire, either. Total hiring has averaged 4.3 million people a month through June this year, before subtracting those who quit, retired or were laid off, the Labor Department says. That’s 1 million fewer than the 5.3 million monthly average in the pre-recession year of 2006.
For every available job, there are three unemployed people — up from an average of just 1.8 before the recession.
Job seekers can testify to how competitive the market is.
Kelly Kloster, 23, was hoping to land a job — any job — in the film industry after she graduated with a degree in cinema and media arts from Southern California’s Biola University in May. She sent out 100 resumes — and heard back from one potential employer. After a grueling interview process, she didn’t get the job.
“I thought I got my degree so that I could get a job right out of college,” she said by email.
Michael Magnum, 28, graduated from the University of Utah in May 2010 with a degree in finance. Unable to land a job as a financial analyst, he worked for a couple of years as a photographer. When he started looking again for a job in finance, he endured six more months of rejections and “dead-end interviews.”
Eventually, he found work with a mortgage lender — for about 40 percent less than the $40,000 starting salary he’d been counting on.