If Unemployment is Down, Why Aren't We Partying?
The unemployment rate fell from 10 percent to 9.7 percent, the manufacturing industry added 11,000 jobs in January -- which is the first monthly increase since November 2007 -- and the number of temporary workers grew by 52,000. Still, the stock market plunged and analysts are predicting it's a long, slow, rocky road to recovery. Why the frowny faces?
Well, for one thing, revised numbers show that the recession is worse than we thought. Job losses since the start of the recession in December 2007 totaled 8.4 million, substantially more than the 8 million previously reported. In addition, the Bureau of Labor Statistics had estimated that the economy lost 85,000 jobs in December; but the revised numbers show that 150,000 jobs disappeared.
By contrast, that makes the 20,000 jobs lost in January look like a blessing from heaven. Still, no jobs have been added, and it doesn't look as if we'll be in positive territory any time soon.
A mixed bag
It may sound like a good thing that temporary jobs grew by 52,000 over the month, but that number is a double-edged sword. This is the industry that provides workers to other businesses, and these jobs are being filled by people who lost higher-paying jobs because their positions were out-sourced. For example, they're the sample givers at Sam's Club who lost their full-time jobs and benefits, then reapplied for the same positions with the outsourcing providers, who pay substantially less. (Don't miss How to Work at Sam's Club Despite Layoffs).
Those who have been out of work for six months or longer are at the highest level since the government started keeping track in 1948. Their numbers have increased from 6.1 million in December to 6.3 million in January.
Analysts keep reminding us that no one expects the 9.7 percent unemployment number to hold or improve. We, as a nation, have been shaken, and we're far more cautious about squandering our money. Those of us who still have jobs are socking our salaries away, rather than frivolously spending with credit cards, as we've done in the past. This trend of saving instead of spending does not help employment growth in the manufacturing, real estate, retail and construction sectors.
In addition, while average hourly earnings of all employees in the private sector have risen 2.0 percent over the past 12 months, those increases are offset by inflation. From December 2008 to December 2009, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 2.8 percent.
Party time? Not yet
Although construction jobs were lost in January and transportation and warehousing lost 19,000 net jobs, health care added 17,000 net jobs in January, retail jobs increased by 42,000 and professional and business services swelled by 44,000 jobs. Also Federal government employment rose in January, partly due to hiring for the upcoming census. (Check out Census Job Opportunities for 2010.)
What's more, the number of persons working part time who preferred full-time employment dropped from 9.2 to 8.3 million, the lowest level in a year.
So there are some positive signs out there -- just not enough to go crazy over. The economy isn't in the free fall it was several months ago. It seems as if we've finally hit bottom and are wallowing around down there. It might take awhile, but there are signs that we will soon be slowly but surely crawling out.