The Bureau of Labor Statistics announcement on Friday, May 7, of robust U.S. job growth in April injected good news into a week filled with grim reports of the abortive Times Square terrorist attack, the Gulf oil spill and the Eurozone crisis. A closer look, however, shows the news was mixed at best.
April payrolls grew by 290,000, way above analysts' predictions, according to a May 7 summary prepared by Ian Shepherdsen, chief U.S. economist at High Frequency Economics. Especially notable was private sector job growth-with temporary government hiring for U.S. census work also a factor. The payroll gains in April touched most sectors, with only retail/transport lagging behind. Even better, Shepherdsen wrote, revisions of first quarter estimates added another 121,000 jobs, "so the core payroll numbers are much better than expected."
However, unemployment also rose in April, to 9.9% from 9.7% in the first quarter. The number of long-term employed reached an all-time high, with 6.7 million American workers idle for at least six months, according to Gary Burtless, a senior fellow at The Brookings Institution. These now represent a breathtaking 46% of the unemployed, compared a high of around 25% long-term unemployed in previous recessions.
"Jobless workers face unprecedented problems finding new jobs," Burtless wrote in a May 10 report. He pointed to new Brookings research showing that the rate of exit from unemployment fell to a new post-World War II low during the current recession, albeit with some improvement in recent months. The unemployment exit rate plummeted for both the newly jobless and those already out of work six months or more.
In another Brookings report, Michael Greenstone, a senior fellow at the institution, wrote on May 7 that despite the upbeat April figures, more than 11 million new jobs will have to be created to reach prerecession employment levels and that erasing the job gap may take years. He writes: "If future job growth continues at a growth rate of roughly 250,000 jobs per month, slightly below the average job growth over the last two months, it would take seven-and-a-half years. In a more optimistic scenario, with 350,000 jobs created per month, it would take more than four years or until the middle of 2014."
Read the full version of the BLS jobs report.
Read the full version of Burtless' report.
Read the full version of Greenstone's report.
Michael S. Fischer (email@example.com) is a New York-based financial writer and editor and a frequent contributor to Wealth Manager.