Slim Job Growth in April, But Fewer Americans Reporting They Worked

BY Paul Solman  May 4, 2012 at 11:19 AM EST

People wait in line at a job fair in the Queens borough of NYC.
People wait in line at a job fair in the Queens borough of New York City. Photo by Spencer Platt/Getty Images.

It’s time for the unemployment news, and our monthly U-7, the most inclusive stat on un- and underemployment in America. It includes all who say they want a job, but don’t have one, or are working part-time but looking for full-time work. (And remember, that friend of yours who’s a “consultant,” billing a few hours a week, is officially counted as “employed” in the government’s headline unemployment number, U-3.)

So what happened in April? During the month, U-7 stands rose so that 26.72 million of our fellow Americans — 16.62 percent of the workforce — is now un- or underemployed. That’s up from 26.6 million and 16.55 percent last month.

Now comes the usual caution: month-to-month fluctuations should be taken with a mine of salt — or at least a Lot’s-wife’s-worth — since they come from a statistical sample. But after dropping for six months in a row, the rise in U-7, though small, is at the very least a somewhat disturbing omen.

Solman Scale

What caused it may be more disturbing still. The Bureau of Labor Statistics reports that while the “non-institutional population” grew by almost 200,000, the “civilian labor force” shrank — by 340,000. The only explanation, besides statistical error: far more Americans passed the one-year mark since they last looked for a job. They have, as a result, been officially dropped from the “labor force.”

There’s some support for this in the numbers. Sixty-five thousand more Americans said they “currently want a job” (but don’t have one) than last month.

Worse still, according to the BLS, is that 160,000 fewer Americans were working in April than in March when the data are “seasonally adjusted,” though such adjustments can be controversial. (The raw numbers show more Americans employed.) But if you believe the seasonally adjusted numbers, they conflict with the so-called “establishment survey” of businesses, which reported an increase of 115,000 jobs in April. Go figure.

But regardless of the conflict, the headline U-3 unemployment rate dropped to 8.1 percent, as taken from the “household survey” of 60,000 American families. The drop occurred because while fewer people reported that they were working, fewer also reported that they were unemployed. That’s because so many people dropped out of the official workforce entirely. As University of Maryland economist Peter Morici put it: “The economy added 115,000 jobs in April-much less than expected and not enough to keep up with natural population growth. The unemployment rate fell to 8.1 percent because another 522,000 adults quit looking for work and are no longer counted.”

But enough with the math. What are the takeaways from this month? A puzzle. Anemic job growth, although still “growth,” according to businesses and upward revisions of job growth for the past two month — always a good thing. But fewer Americans reporting that they worked and a shrinking of the labor force, which isn’t good. And a rise in U-7, which isn’t good at all.

One final cause for concern: the long-term unemployed. Their numbers held steady at 5.1 million in April, more than 40 percent of the total unemployed. That’s a remarkably high total. To put in perspective, a chart from the Pew Fiscal Analysis Initiative.

Historical Long-Term Unemployment
Click for larger view. Source: Pew analysis of Bureau of Labor Statistics and National Bureau of Economic Research data. Note: Data are not seasonally adjusted. Data are shown by quarter. National Bureau of Economic Research recessions are shaded.

You just don’t see pictures like this very often over periods of nearly half a century. What explains it? A hard and huge core of workers whose work skills are suddenly obsolete? The Baby Boom Bulge that’s reaching retirement age, but whose members don’t want to — or can’t afford to — retire, but don’t want to — or can’t afford to — take the lower wages that the marketplace is now offering? Is age discrimination a big part of the picture, as Baby Boomers try to hang on but no one wants them? Is unemployment insurance allowing people to remain unemployed longer? All of the above? Whatever the reasons, it’s a more graphic depiction of long-term unemployment than I’ve ever seen before. And I’ve been reporting on the people they chart for almost as far backwards as the data extend.

“In the first quarter of 2008, the people who had been jobless for a year or more was about 9.5 percent of the unemployed. Today it’s about triple that, at 29.5 percent,” Ingrid Schroeder, director of the Pew Fiscal Analysis Initiative, told us. (Note that Schroeder is talking about people who have been truly long-term unemployed — out of work for an entire 12 months — unlike the BLS which calls long term unemployment those who have been out for only six months or more) “That translates to about 3.9 million people, or more than the total population of Oregon,” she added.

Finally, here’s the monthly roundup of what others are saying. The word of choice this morning is “sluggishness.”

The New York Times: “April’s job growth was less than what economists had been predicting. … The share of working-age Americans who are in the labor force, either by working or actively looking for a job, is now at its lowest level since 1981 — when far fewer women were doing paid work.”

The Wall Street Journal: “U.S. job growth slowed again in April, a fresh sign that the economy could be settling into a sluggish spring. … The unemployment rate has dropped since August, when it was 9.1%, though some of the decline has resulted from people leaving the work force. Federal Reserve officials have said that they expect only gradual progress the rest of this year. The Fed last week forecast that the unemployment rate would fall to somewhere between 7.8% and 8.0% by the end of this year.”

Reuters: “The unemployment rate ticked a tenth of a point lower to 8.1 percent, a three-year low, as people left the workforce. The jobless rate is derived from a separate survey of households, which showed a drop in the number of jobs in April. Still, the report was not all negative. The government revised upward its initial estimates for payroll growth in February and March by a combined 53,000. That left the six-month average of job growth at 197,000, nearly exactly where it would have been had April job growth come in as expected at 170,000.”

Douglas Holtz-Eakin, in an email: “In short, not many jobs, not much income, and not enough hope for over 300,000 workers who gave up looking. … The bottom line: The April jobs report has little sunshine. Look for the left to blame ‘austerity’ and renew calls for ‘temporary stimulus.’ Unfortunately we are now in year 4 of this failed strategy.”

This entry is cross-posted on the Rundown- NewsHour’s blog of news and insight.