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Hiring in U.S. Tapers Off as Economy Fails to Gain Speed Hiring in U.S. Tapers Off as Economy Fails to Gain Speed
(about 7 hours later)
It looks as if the “spring swoon” is back. It looks as if the spring swoon is back.
American employers increased their payrolls by 88,000 last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since last June, and less than half of what economists had expected. American employers added an estimated 88,000 jobs to their payrolls last month, compared with 268,000 in February, according to a Labor Department report released Friday. It was the slowest pace of growth since last June, and less than half of what economists had expected.
It also was the start of a third consecutive spring in which employers have tapered off their hiring, even after the Labor Department adjusted the numbers for the usual seasonal changes. Slowdowns in the previous two years could be attributed to flare-ups in the European debt crisis, but this time the cause is unclear. The recent payroll tax increase or political gridlock in Washington could be to blame for the sudden slowdown, but neither seems to be showing up much in other relevant economic data. It also was the start of a third consecutive spring in which employers tapered off their hiring after a healthy start to the year. Slowdowns in the previous two years could be attributed to flare-ups in the European debt crisis, but this time the cause is less obvious. The recent payroll tax increase or other fiscal tightening in Washington could be partly to blame for the sudden retreat in hiring, but neither seems to be showing up much yet in other relevant economic data.
“I’m at a bit of loss as to how to explain it,” said Paul Dales, senior United States economist at Capital Economics. “Even if this is the start of another springtime-summertime slowdown, we’re hoping it’ll be a bit more modest than it was in previous years, because the housing market is doing very well.” “People were starting to believe the economy was really picking up steam, and desperately wanted this report to be better,” said Joshua Shapiro, chief economist at MFR Inc. “But that didn’t happen.”
The unemployment rate, which comes from a different survey, ticked down to 7.6 percent in March, from 7.7 percent, but for an unwelcome reason: more people dropped out of the labor force, rather than more got jobs. Economists like Mr. Shapiro cautioned that the numbers, which are adjusted for normal seasonal variations, are volatile from month to month and are still subject to revision.
The labor force participation rate has not been this low — 63.3 percent — since 1979, a time when women were less likely to be working. Baby boomer retirements may account for part of the slide, but discouragement about job prospects in a mediocre economy still seems to be playing a large role, economists say. Nonetheless, the closely watched monthly jobs report was discouraging.
“The drop in the participation rate has been centered on younger workers,” said Joshua Shapiro, chief economist at MFR Inc., “many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.” The unemployment rate, which comes from a different survey, ticked down to 7.6 percent in March, from 7.7 percent, but for the wrong reason: because more people reported dropping out of the labor force (meaning they are neither working nor looking for work), not because more people were hired.
Stock market indexes were down in Friday afternoon trading. The labor force participation rate has not been this low — 63.3 percent — since 1979, a time when women were less likely to be working.
Still, as always, economists cautioned not to draw too many conclusions from one month’s report, because the numbers will inevitably be revised. Baby boomer retirements may account for part of the slide, but pessimism about job prospects in a mediocre economy still seems to be playing a large role, economists say.
“Remember that we’ve had a pattern of upward revisions,” said John Ryding, the chief economist at RDQ Economics, noting that the government on Friday revised January and February’s net growth upward by a total of 61,000 jobs. “Before we read too much into it, bear in mind we have at least two more cracks of the whip before the number is really finalized.” “The drop in the participation rate has been centered on younger workers,” said Mr. Shapiro, “many of whom have given up hope of finding a decent job and are instead continuing in school and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”
March’s job gains were concentrated in professional and business services and health care, while the government again shed workers, as it has been doing for most of the last four years, though reductions at the Postal Service accounted for most of the latest decline. Economists expect more government layoffs in the months ahead as the effects of Congress’s across-the-board budget cuts make their way through the system. Investors initially responded to the jobs report by sending the major stock market indexes down more than 1 percent. But as the day went on, strategists sent out reports noting that the economic slowdowns in previous years ended up being temporary. The Standard & Poor’s 500-stock index climbed back to end the day down only 0.4 percent.
Some policy makers have started to publicly address deficiencies in the quality of the jobs being created by the private sector, in addition to their quantity. “Given the noise in the data you don’t want to set your pants on fire about it,” said Michael Feroli, chief United States economist at JPMorgan Chase.
Job gains in March were concentrated in professional and business services and health care.
The government again shed workers, as it has been doing for most of the last four years, though reductions at the Postal Service accounted for most of the latest decline. Economists expect more government layoffs in the months ahead as the effects of Washington’s across-the-board budget cuts make their way through the system.
“While the recovery was gaining traction before sequestration took effect, these arbitrary and unnecessary cuts to government services will be a headwind in the months to come, and will cut key investments in the nation’s future competitiveness,” Alan B. Krueger, the chairman of President Obama’s Council of Economic Advisers, said in a statement.
The latest report should quiet speculation that the Federal Reserve will take its foot off the monetary accelerator anytime soon, as some had suggested after a spike in hiring in February. Even before Friday’s numbers came out, though, Fed officials had expressed concerns about not only the pace of job growth, but the quality of hiring as well.
“It’s important to look at the types of jobs that are being created because those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a recent speech.“It’s important to look at the types of jobs that are being created because those jobs will directly affect the fortunes and challenges of households and neighborhoods as well as the course of the recovery,” Sarah Bloom Raskin, a member of the Federal Reserve Board, said in a recent speech.
Relatively low-wage sectors like food services and retail businesses have accounted for a large share of the job growth in the last few years; a report in August from the National Employment Law Project, a liberal advocacy group, found that a majority of jobs lost during the downturn were in the middle range of wages, while a majority of those added during the recovery have been low-paying. She noted that relatively low-wage sectors like food services and retail businesses had accounted for a large share of the job growth in the last few years; a report in August from the National Employment Law Project, a liberal advocacy group, found that a majority of jobs lost during the recent recession were in the middle range of wages, while a majority of those added during the recovery had been low-paying.
In March, in fact, jobs in food services and drinking places accounted for the largest share of total American employment on record. Today nearly one in 13 American jobs is in this industry.In March, in fact, jobs in food services and drinking places accounted for the largest share of total American employment on record. Today nearly one in 13 American jobs is in this industry.
Ms. Raskin also expressed concern about temporary jobs, which account for a growing share of total employment.Ms. Raskin also expressed concern about temporary jobs, which account for a growing share of total employment.
Usually an increase in temp hiring is considered a good thing, at least at the start of a recovery, because it indicates that employers are thinking about taking on permanent workers. So far, though, employers seem to be sticking with those temporary contracts.
“Temporary help is rapidly approaching a new record,” said Diane Swonk, chief economist at Mesirow Financial, who noted that there was also a rapid increase in temp hiring during the boom years of the 1990s. “That of course means more flexibility for employers, and less job security for workers.”“Temporary help is rapidly approaching a new record,” said Diane Swonk, chief economist at Mesirow Financial, who noted that there was also a rapid increase in temp hiring during the boom years of the 1990s. “That of course means more flexibility for employers, and less job security for workers.”
Perhaps more distressingly, 7.6 million workers who want full-time work still can find only part-time work, and their missing work hours do not count toward the official unemployment rate. The number of such workers fell slightly from February, but is still about where it was a year ago. Perhaps more distressingly, 7.6 million workers who want full-time work can find only part-time work, and their missing work hours do not count toward the official unemployment rate. The number of such workers fell slightly from February, but is still about where it was a year ago.
These workers are the lucky ones, at least compared with those still seeking a job, who often have no source of income at all. A broader measure of underemployment, which includes those reluctantly working part time as well as those who want jobs but have stopped looking, stands at 13.8 percent.
Long-term unemployment — joblessness lasting more than six months — has been a persistent problem. And it may be partly driven by the fact that the jobs available are not remunerative enough to be worth workers’ time. At the same time, long-term unemployment — joblessness lasting more than six months — has been a persistent problem ever since the recession ended in the middle of 2009. And it may be partly driven by the fact that many of the jobs available do not pay well enough to be worth taking.
“When I’ve had offers for positions they’re part time or temporary, but the child care I’d need to pay to take the jobs is more costly than what I’d be getting paid for the job I’m being offered,” said Linda Rubiano, 37, of Pennsauken, N.J., a single mother with a 3-year-old boy. She was laid off from her paralegal job, which she had held for five years, in January 2012. “There are just not a lot of full-time job openings that have contacted me even though I’m sending out tons of résumés. It’s really, really frustrating.” “When I’ve had offers for positions they’re part time or temporary, but the child care I’d need to pay to take the jobs is more costly than what I’d be getting paid for the job itself,” said Linda Rubiano, 37, of Pennsauken, N.J., a single mother with a 3-year-old boy. She was laid off from her paralegal job, which she had held for five years, in January 2012. “It’s really, really frustrating.”
Hoping to have better luck in a different career, Ms. Rubiano went back to school to get certified as a teacher, although she worries about what New Jersey’s budget cuts might mean for her teaching prospects now. In the meantime, she has cobbled together a temporary income from unemployment benefits (which will expire soon), child-support payments from her ex-husband, and a $450 monthly stipend for being host to an international student. Getting people like Ms. Rubiano back to work soon is critical to the economy’s future, experts say. In many cases, the longer people stay unemployed, the less employable they become.
Getting people like Ms. Rubiano back to work soon is critical to the economy’s future, experts say. The longer people stay unemployed, the less employable they become, thanks to stigma, skill deterioration and other factors.
“This seems to be a long-term sleeper crisis too, as we think about long-term unemployed workers who are in midlife and older workers who are likely dipping into retirement savings in order to stay afloat,” said Christine L. Owens, executive director of the National Employment Law Project. “We’re setting ourselves up for somewhere, 10 years down the road, when a lot of retirees who didn’t expect to live in poverty are going to be in poverty.”“This seems to be a long-term sleeper crisis too, as we think about long-term unemployed workers who are in midlife and older workers who are likely dipping into retirement savings in order to stay afloat,” said Christine L. Owens, executive director of the National Employment Law Project. “We’re setting ourselves up for somewhere, 10 years down the road, when a lot of retirees who didn’t expect to live in poverty are going to be in poverty.”

Nathaniel Popper contributed reporting.