Unemployment rate falls to 2-year low

Unemployment rate falls to 2-year low

Jeannine Aversa
Associated Press
April 1, 2011

WASHINGTON - The unemployment rate fell to a two-year low of 8.8 percent in March, capping the strongest two months of hiring since before the recession began.

The economy added 216,000 jobs last month, the Labor Department said Friday. Factories, retailers, the education and health care sectors and professional and financial services all expanded payrolls. Those job gains offset layoffs by local governments.

Another month of brisk hiring provided the latest sign that the economy is strengthening nearly two years after the recession ended. Still, a surprisingly large number of people who stopped looking for work during the downturn have yet to start looking again.

Private employers, the backbone of the economy, are driving the gains. They added more than 200,000 jobs for a second straight month. It was the first time that's happened since 2006 — more than a year before the recession started.

"The U.S. labor market is finally making some serious progress," said Sal Guatieri, economist at BMO Capital Markets Economics.

The unemployment rate dipped from 8.9 percent in February. The rate has fallen a full percentage point over the past four months. That's the sharpest drop since 1983.

Economists predict employers will add jobs at roughly the same pace for the rest of this year. That would generate about 2.5 million new positions. Still, that would make up for only a small portion of the 7.5 million jobs wiped out during the recession.

Ed Kashmarek, a Wells Fargo economist in Minneapolis, had guarded optimism for today’s national report.

“It’s continuing the recovery that we have been seeing. It’s decent. But because the recession was so deep, it is going to take much more juice to get us back to where we were before the recession.”

The nation has gained 470,000 jobs over the last couple of months, he said, noting that much of the growth has come from the private sector. “There is a lot of concern about the fate of government jobs” as budgets nationwide continue to be pinched. Concern is very high in Minnesota, he said. The state has lost about 600 government jobs in the last 12 months and more losses are expected.

Minnesotans are “sitting on pins and needles” awaiting the fallout from aggressive budget cuts, Kashmarek said. “People are looking at Wisconsin and waiting to see what will happen to our own budget. The next few months will be a telling time.”

A big factor in the lower unemployment rate is that the proportion of people who either have a job or are looking for one is surprisingly low for this stage of the recovery.

People who stopped looking for work during the downturn are not counted as unemployed. If many out-of-work people start looking for work again, they will be counted and the unemployment rate could go up. That could happen even if the economy is adding jobs.

Local governments, wrestling with budget shortfalls, cut 15,000 workers last month and are expected to keep shedding jobs. Home prices are falling amid weak sales and a record number of foreclosures. Construction spending dropped in February to a 12-year low. Higher food and gas prices are leaving consumers with less disposable income to spend on other goods and services.

Workers' paychecks were flat in March. Average hourly earnings held steady at $22.87, unchanged from February. Over the past 12 months, wages have lagged behind inflation. Workers have little bargaining power to demand big pay raises because the job market is still healing slowly.

Another report out Friday showed that manufacturing activity cooled off a bit last month after expanding in February at the fastest pace in nearly seven years. Still, the sector grew for the 20th straight month, another positive sign for the economy.

The number of unemployed people dipped to 13.5 million in March, still almost double since before the recession began in December 2007.

Including part-time workers who would rather be working full time, plus people who have given up looking altogether, the percentage of "underemployed" people dropped to 15.7 percent in March, the smallest share in two years.

Professional and business services, including accountants, bookkeepers, engineers and computer designers, added 78,000 positions, the most since November. Of those, 29,000 were temporary positions.

Factories added 17,000 jobs in March, the fifth straight month of gains. Retailers added nearly 18,000 jobs, after cutting them in February. Financial services expanded payrolls by 6,000, following two straight months of cutbacks. Education and health services expanded employment by 45,000, leisure and hospitality added 37,000 jobs.

Aside from layoffs by local governments, other sectors eliminating jobs included construction, transportation and warehousing, and information services, such as telecommunications. State government hiring was flat, after four straight months of layoffs.

Retailer Aaron's Inc. said this week that it plans to create almost 1,000 jobs in the United States and Canada this year. The company sells and leases residential furniture, consumer electronics, home appliances and accessories.

Google Inc. said earlier this year that it plans to hire more than 6,200 workers in 2011, the biggest expansion by the Internet's most profitable company. That would increase the company's work force by more than 25 percent.

Star Tribune staff writer Dee DePass contributed to this report

This says it all:

People who stopped looking for work during the downturn are not counted as unemployed. If many out-of-work people start looking for work again, they will be counted and the unemployment rate could go up. That could happen even if the economy is adding jobs.

Exactly. This article is nonsense. Particularly the claim that the "U.S. labor market is finally making some serious progress..."

We will not make serious progress on the economy until we get our burgeoning government under control. The flood of new laws, new regulations, new agencies, new programs, and new taxes that Obama and the Democrats have unleashed on this country will continue to be an anvil about the neck of our economy until this direction is reversed. I predict that we will not see unemployment return to pre-recession levels this year or the next. The only thing that will turn this around will be the defeat of the Democrats in 2012 - a takeover of the Senate and the White House and the installation of a Congress willing to make sane fiscal and regulatory reforms.

TexasBlue wrote:This says it all:

People who stopped looking for work during the downturn are not counted as unemployed. If many out-of-work people start looking for work again, they will be counted and the unemployment rate could go up. That could happen even if the economy is adding jobs.

How many people are there genuinely like that? What are the figures?

Furthermore, I notice some elements of the right like to claim part-time workers are "unemployed". A job is a job is a job, if you are earning money and paying income taxes on it, you are not unemployed. You can't class part-time workers as unemployed for political convenience any more than you can fiddle the unemployment figures by classing as "students" unemployed people doing part-time study.

The_Amber_Spyglass wrote:How many people are there genuinely like that? What are the figures?

Approximately 16 million unemployed as of March 1 (latest figures). That makes the real unemployment rate 12%. This counts those who can't collect due to running out of benefits.

The_Amber_Spyglass wrote:Furthermore, I notice some elements of the right like to claim part-time workers are "unemployed". A job is a job is a job, if you are earning money and paying income taxes on it, you are not unemployed. You can't class part-time workers as unemployed for political convenience any more than you can fiddle the unemployment figures by classing as "students" unemployed people doing part-time study.

If one works less than 32 hours a week, they aren't full time. But you can't collect if you work less than 32 and make more than your unemployment compensation.

I worked part time at that post office. I only got between 3 and 10 hours a week. I still had to file for unemployment. That made me officially unemployed.

It isn't a right wing thing.

Same here, whether you are entitled to unemployment benefit depends on how much you earn, not on how many hours you work. You would work 10 hours a week as a business consultant and be earning a shitload of money. But you don't get unemployment benefit if you are working, you get "income support" which takes you up to what an unemployed person would get (don't pay income tax).

I was sort of getting the impression that the right wing media there was classing people as unemployed when they were working fewer than full time hours but still working nonetheless.

The_Amber_Spyglass wrote:I was sort of getting the impression that the right wing media there was classing people as unemployed when they were working fewer than full time hours but still working nonetheless.

The gov't here classifies one as unemployed when they collect. All media here has done stories on this in recent months since many have exhausted bennies.

by "collect" you mean receiving unemployment benefit? Is there a threshold (hours or monetary value) at which a working person can claim unemployment while working?

The_Amber_Spyglass wrote:by "collect" you mean receiving unemployment benefit? Is there a threshold (hours or monetary value) at which a working person can claim unemployment while working?

In Minnesota (all states are similar but can vary), one has to work less than 32 hours a week and make less than what your unemployment benefits are. My bennies were $354 a week, which was based on what I made at the printing plant. The max anyone can collect is $560 here.... even if you made $900 a week in your former job.

Again, I could work 25 hours but make $395 for that week with those hours (hypothetical situation) but can't collect benefits for that week because I made more than my weekly compensation.

That sounds complex. Over here it is purely what you earn. Somebody working as a consultant for 5 hours a week, but charging £100 per hour earns £500 a week so isn't entitled because he/she is earning a full-time wage.

Thanks for the clarification, I just wanted to understand how your system works. I guess that goes some way to explaining on SOME cases why somebody can be working and still get unemployment benefit. Here, people in that situation are not unemployed and don't get unemployment benefit because they get what is called "income support".

The_Amber_Spyglass wrote:That sounds complex. Over here it is purely what you earn. Somebody working as a consultant for 5 hours a week, but charging £100 per hour earns £500 a week so isn't entitled because he/she is earning a full-time wage.

Thanks for the clarification, I just wanted to understand how your system works. I guess that goes some way to explaining on SOME cases why somebody can be working and still get unemployment benefit. Here, people in that situation are not unemployed and don't get unemployment benefit because they get what is called "income support".

Yeah, it's just the divide in how our systems work. I was drawing unemployment when working for that post office because it paid only $9.45 to start and I finished at $10.24 an hour at the end. It was that plus the lack of hours that kept me in the system, so to speak. My checks were every two weeks and were only $60 to $80. But it helped having that job because it looks good on one's resume and the fact I wasn't sitting on my ass all week.... well... some of the week.

State benefits are only 26 weeks. Then the federal extension kicked in and is still on going. It last for a total of 99 weeks. After that, people are shit outta luck. Federal extensions are rare, too.