CEPR - Center for Economic and Policy Research


En Español

Em Português

Other Languages

Home Publications Data Bytes Jobs Bytes Employment Gains Slowing Down

Employment Gains Slowing Down

September 1, 2006 (Jobs Byte)
Jobs Byte

Employment Gains Slowing Down

September 1, 2006
By Heather Boushey
Job creation has slowed since April. The economy added 128,000 new jobs this month and the unemployment rate fell from 4.8 to 4.7 percent. In 2005, the economy added an average of 165,000 jobs each month, but since April the economy has only added an average of 120,850 jobs each month.

There are other mixed signals in this month’s report as to how the recovery is faring. On the one hand, job growth is slowing, but on the other, wage growth continues to keep up with inflation. The annual rate of wage growth over the past three months was 4.2 percent, above the 3.9 percent average over the past year.

More good news is that a number of industries added jobs, but the levels were mostly just below their monthly annual average. After four months of little or no growth, construction added 17,000 new jobs last month. Health and education services showed strong employment gains, adding 60,000 new jobs, twice its annual average.

Among the sectors losing jobs were retail trade, which lost 14,000 jobs in August and 101,000 jobs over the past year, and manufacturing, which has lost 34,000 in the last two months, the majority of which (29,300 jobs) were in automobiles and parts. Transportation lost 7,100 jobs in August, but this may be because July’s employment gains were relatively high.

The temporary help sector has seen no real employment gains over the past year, adding 3,400 jobs in August, which puts the industry back at its January employment level. Limited job gains in this sector may imply that employers are hiring regular employees instead. Given the slower overall employment gains, however, it remains to be seen whether this is truly the case.

Hours fell last month by 0.1 to an average of 33.8 hours per week. Hours tend to change slowly and this one-month decline may not indicate anything, but it remains the case that hours are nowhere near their peak of 34.6 in the late 1990s. The index of aggregate weekly hours (hours per week multiplied by the number of workers) also fell, from 105.2 to 105.0, but this indicator remains above 102.7, where it was a year ago.

Indicators of how hard it is to find work showed no real signs of improvement in August and remain at high levels for this point in the business cycle. Median weeks unemployed increased from 8.2 to 8.5 weeks and the share of workers who are long-term unemployed (searching for work for at least six months) fell only slightly, from 18.6 to 18.4. While the share of long-term unemployed is lower than a year ago, it is still exceptionally high compared to prior business cycles. The share of non-employed people who report that they are too discouraged to search for work is also high relative to this time last year.

The recession of 2001 was especially hard on women, but they are now gaining back the jobs lost. About 60 percent of employment gains over the past year have gone to women. These gains have been concentrated especially among older women: over the past year, women aged 55 and over accounted for 29.9 percent of employment gains. The share of women aged 20 with a job has grown by half a percentage point over the past year, while the share of men with a job remains unchanged. At 58.2 percent, women’s employment remains below its peak of 58.9 percent in early 2000. Women’s labor force participation is also moving up: in August, it was 60.7, just slightly below the peak of 61.0 percent in 2000. For men, the employment rate has been unchanged over the past year, at 72.7 percent, still 1.8 percentage points below the peak of 74.5 in early 2000.

Professionals are faring better than other workers in this recovery. The unemployment rate for college-educated workers fell to 1.8 percent, the lowest rate since before the recession. At the same time, the number of unemployed construction workers is 10.2 percent higher than a year ago.

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. 

Combined Federal Campaign #79613




Latin America

Social Security


Union Membership




Displaced Workers