Euquant

Synopsis of Jobs Report and Economic Activity for March 2010

At first glance the employment report looks perplexing because it shows a labor market that is gaining workers (162,000) but at the same time and unemployment rate that remained constant at 9.7%. Also the jobs report shows that the number of unemployed workers has increased (134,000) along with an increase the number of workers who are employed part-time but want to be employed full-time (263,000). However, this paradoxical behavior actually reflects an economy that is beginning to behave in a way that is normal for an economic recovery.

Specifically, the unemployment rate remained the same because more workers entered the labor market in search of jobs (398,000), which is an encouraging sign. Part-time employment increased because more firms are hiring; this is also encouraging. The number of unemployed workers increased because as workers reenter the labor market they are counted among the unemployed. Finally, government hiring related to the 2010 census only accounted for 30% (48,000) of the 162,000 new jobs in March. This is a long way from the 650,000 monthly job loss a year ago.

HIGHLIGHTS:

The unemployment rate remained unchanged in March at 9.7% despite the fact that were 162,000 jobs created. One reason why the unemployment rate did not decrease as expected is because the labor force increased by 398,000 workers. This is a good sign because it means that workers are beginning to reenter the labor market to search for jobs.

Of the 162,000 jobs that were created in March, 48,000 are attributable to government hiring of temporary workers to conduct the census.

This means that excluding census workers, the economy created 114,000 jobs in March. This is a significant turnaround from all previous months over the last two years. In February, the economy lost 36,000 jobs. Although some of the job gain is attributable to individuals moving into the labor market following the bad weather in February, still the number of new jobs created is very significant.

Another sign of increasing strength in the labor market is the increase in the number of individuals who are employed part-time for economic reasons (i.e. they would prefer to be employed full-time). That number increased by 263,000 workers. It now stands at 9.1 million which is up from 8.8 million in February. Again, while this number appears to be bad, it may also reflect the fact that businesses are beginning to hire workers, even if they are doing so on a part-time basis.

The other sign of improvement in the labor market is a decline in the number of workers who were marginally attached to the work force and those who are discouraged workers. Marginally attached workers are workers who would like to work but are discouraged and have not looked for a job over the last year. Discouraged workers are a part of this number and they are workers who have not searched over the last four weeks. The number of marginally attached workers decreased to 2.3 million in March from 2.5 million in February. Discouraged workers decreased from 1.2 million two 994,000 workers. In both cases the change was too small to be statistically significant.

Among demographic groups, unemployment remained unchanged for whites and 8.8%, for blacks it increased from 15.8% to 16.5% and among Hispanics it was virtually unchanged, from 12.4% to 12.6%.

Apart from the 48,000 increase in temporary government workers, other industries experiencing job gains were as follows: temporary help services 40,000; healthcare 27,000; and manufacturing 17,000.

Finally, the average work week increased by .1 hours to 34.0 hours in March.

These are all signs that the recovery has indeed taken hold.

Thomas "Danny" Boston
Prof. of Economics at Georgia Tech & CEO of Euquant