The Economist: A pebble of a milestone
The author of this entry is responsible for this content, which is not edited by the Wilson County News or wilsoncountynews.com.
It’s taken longer than six years, but the US economy has finally passed a notable milestone: private-sector employment is now more than it was before the recent recession. The March 2014 estimate of total private employment from the Bureau of Labor Statistics is a seasonally adjusted 116.1 million, just barely over the prior peak in January 2008. This is certainly good news (though a subsequent revision might possibly take it away), but I’m feeling only mildly celebratory about it.
First, we’re not quite back to the overall total (including both private-sector and government jobs). The March figure stood at 137.9 million employed, compared to almost 138.4 million in January 2008. Of course, government spending cuts have been a fact of life over the past few years (such as with the sequester and various deals struck in order to raise the debt ceiling and accomplish other necessary tasks, not to mention retrenchments by state and local public entities). Usually, business cycles leave the government sector basically untouched or even adding jobs during slow periods in the private economy; not so this time around.
Moreover, since January 2008, we should have been adding jobs, not just struggling to get back to where we were. Sheer population growth means we need more opportunities, and six years to move nowhere is not ideal. Depending on your assumptions about growth, the economy should have added millions of jobs over that period of time.
The current recovery has been frustratingly slow in terms of hiring. The Atlanta Branch of the Federal Reserve System found that the average time to recover all jobs lost during the seven recessions between 1950 and 1989 was just 10 months. After the 1990-91 downturn, it took a little longer (23 months), and even more time after 2001 (38 months). We are now at six years and counting (if you look at total employment) to recover.
Add to this lackluster situation the fact that compensation has hardly moved, with workers earning little more than they were before the recession. In addition, the percentage of long-term unemployment is very high by historic standards, and the labor force participation rate is about as low as it has been in decades.
These overall national totals camouflage substantial differences in performance among regions. As I’ve mentioned before, Texas has been performing much better than the nation as a whole. The Lone Star State had recovered all of the private-sector jobs lost in the recession by November 2011. Since the US peak in private employment in January 2008, Texas has added more than 765,000 jobs (as of the latest state-level data, which was for February) or well over one million since the trough. New York is a distant second with a gain of 255,500 jobs, followed by California which is up by 109,300 (not too impressive given its much larger overall size than Texas or New York). Texas’ strong relative performance is even more apparent when you look at total employment (including the government sector), when some states such as California drop back into negative territory.
In fact, only 17 states actually have higher employment now than in January 2008; those just mentioned plus North Dakota (89,200), Massachusetts (65,100), Louisiana (47,900), District of Columbia (42,400), Minnesota (39,400), Colorado (38,100), Utah (29,800), Alaska (16,100), Oklahoma (15,400), and Nebraska (13,000). Iowa, Washington, South Dakota, and Montana all gained fewer than 10,000.
Conditions are particularly bad in Illinois, which now has 155,400 fewer private-sector jobs than in January 2008. Several other states are down more than 100,000 (New Jersey, Florida, Arizona, and Ohio). Dozens have lost tens of thousands of jobs.
Not all news on the national jobs front is grim. One of the bright spots is job openings and labor turnover data released this week by the Bureau of Labor Statistics, which indicate almost 4.2 million job openings across the United States. Openings are up from January’s estimate of 3.9 million, though not much better than in February 2013 (4.0 million). Available jobs are particularly numerous in the retail and accommodation and food services segments. Professional and business services are also trending upward, as are education and health services openings. Manufacturing job openings are down from a year prior, as are those in government.
It’s disheartening to see how far some states still have to go to get back where they were before the recession. At the same time, the large gap in performance is a strong indication of the fact that the things we are doing well here in Texas are working. Of course, the oil surge is one factor, but the state’s job gains span all industries, skill levels, and wage categories. Hopefully, in the months to come, we will see the national economy reach more milestones, with hiring and opportunities on the rise.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.