March 9, 2007 (Jobs Byte)
Economy Adds 97,000 New Jobs, But Hours Fall
March 9, 2007
By Heather Boushey
The share of the population with a job fell even as unemployment remains steady.
The unemployment rate remained unchanged at 4.5 percent and the economy added 97,000 jobs in February. With revisions, the economy has added an average of 156,000 jobs per month for the past three months, about average for this economic recovery.
Construction shed 62,000 jobs in February. The losses were spread across both residential and non-residential specialty contractors, indicating that they are likely due to the severe weather around the nation that limited construction activities during the survey week. However, residential specialty trade contractors have lost 128,000 jobs over the past year, so February’s losses are not just a one-month aberration. Job losses also occurred in manufacturing, which shed 14,000 last month for a total of 97,000 over the past year.
The job losses in the goods-producing sector were tempered by gains in the service-producing sector, which added 168,000 new jobs last month. Government added 39,000 jobs last month, which is higher than average, and much of that hiring was in state education. However, temporary help lost l2,000 jobs last month and has been flat for the past year.
The severe weather during the survey week may also have affected other labor market indicators as employers cancelled overtime or suspended hiring activities through the storms. The index of hours fell by 0.3 percent in February, but it is still up by 1.6 percent from a year ago. Even if this decline was driven by weather conditions, it is worthy of note that this is the largest one-month decline since June 2004. Also, the share of the unemployed who have been out of a job and searching for work for at least 6 months rose last month from 16.1 to 17.8 percent. The median number of weeks that workers spend unemployed has been falling since mid-2003, and is now at 8.1 weeks.
Wages continue to outpace inflation. Over the past three months, the annual average rate of growth was 4.1 percent, about twice the annual rate of inflation. Whereas employment peaked in 2000, wage growth remained strong during the recession and the first few years of the economic recovery, finally peaking in late 2003. Real wages fell through the late 2006 and then began a sharp rise. The gains of late 2006 have held their ground since then and real wages currently remain above their 2003 peak.
There are some mixed employment indicators in the household survey this month. The labor force participation rate fell from 66.4 percent in December to 66.2 percent in February. The employment rate also fell by 0.2 percentage points from December to February, while the unemployment rate stayed about the same. While overall, teens have not seen a rise in their unemployment rate, the unemployment rate of African American teens rose from 26.2 in December to 29.1 percent in January and 29.0 percent in February.
Older workers gained jobs in February, while prime-age workers lost jobs. Over the past year, older workers (aged 55 and over) have accounted for 43.4 percent of the net employment gains, while workers aged 25 to 44 have accounted for only 22.1 percent. While most age groups have seen employment gains over the past year, teenage men and women have lost jobs, as have women aged 35 to 44, who lost 29,000 jobs.
There are also indications that less-educated workers are having a harder time finding jobs. The unemployment rate for workers with less than a high-school degree increased from 6.8 to 7.1 last month, while falling for workers with at least some college or a bachelor’s degree. There was a sharp increase in the labor force participation rate of workers without a high-school degree, rising from 47.0 to 47.9 percent, while falling by a full percentage point for workers with some college.
Heather Boushey is senior economist at the Center for Economic and Policy Research in Washington, DC.
CEPR’s Jobs Byte is published each month upon
release of the Bureau of Labor Statistics’ employment report.