September 2, 2005 (Jobs Byte)
Jobs Byte

Economy Continues to Add Jobs

September 2, 2005
By Heather Boushey

There are 150,000 fewer discouraged workers compared to August 2004, two-thirds of which is due to fewer discouraged men.

The economy added 169,000 jobs in August and the June and July employment levels were revised upwards by 9,000 and 44,000, respectively. After slow job growth during the first three years of the recovery, we are now finally reaching job creation rates achieved during the mid-1990s.

Employment gains were spread across the economy, but concentrated in services. Education and health services added 43,000 new jobs, while professional and business added 29,000 new jobs. Manufacturing shed workers for the third consecutive month, losing 14,000 jobs. In the past year, manufacturing has lost 110,000 jobs.

The temporary help sector has shown slowing growth over the past few months. Last month, this sector added 7,000 new jobs, also the average monthly gain for 2005. This is down from an average monthly gain of 14,900 in 2004.

Wages have grown over the past quarter, at an annualized rate of 3.3 percent. This is higher than the annualized rate of inflation for the past three months, of 1.9 percent. However, some sectors-leisure and hospitality, retail trade, and nondurable goods-continue to see falling inflation-adjusted wages.

Average weekly hours remain at 33.7 hours per week. The index of aggregate weekly hours increased by 0.1, up to 102.9. This puts the index closer to its level in 2000 when the index was over 103 for the entire year. This increase has been driven entirely by increased hours in the service sector. The hours index -in the goods producing sector has not recovered; it was 98.1 last month, down from 114.2 in April 2000.

The unemployment rate fell to 4.9 percent. This is the first time unemployment has dipped below 5 percent since the recession in 2001. The share of individuals with a job-the employment to population ratio - rose from 62.8 to 62.9 percent. The employment rate still has a long way to go, however, before returning to the pre-recession peak of 64.7 percent. The lower employment rate translates into 4.1 million fewer individuals at work.

Over 2005, men have seen a sharp uptick in their employment rate. For men aged 20 and over, employment rates hovered around 72 percent in 2004, but since then have soared, reaching 72.8 percent in August. Women's employment, however, has not shown a sharp increase. It hovered around 57.4 percent for most of 2004, and now has only reached 57.7 percent. This is unusual in that women's employment usually recovers faster than men's after a recession. Women's employment rate remains 1.5 percentage points below its peak in 2000 of 58.9. By this point in the previous recovery, it was 0.4 percentage points above the pre-recession peak.

Black teens saw a sharp increase in their unemployment rate in August, up from 33.1 percent to 35.8 percent, reversing a two-month trend of falling unemployment. Their employment rate fell sharply from 22.0 percent down to 20.9 percent. The indicators for this subgroup tend to jump around because of the relatively small sample size, but certainly indicate a lack of sustained improvement in the labor market prospects of young Blacks.

The share of workers who are long-term unemployed, having been out of work and searching for a job for at least six months, rose for the second month in a row, from 18.7 to 19.2 percent. The median months unemployment bumped up to 9.4 weeks last month, after hovering around 9.0 weeks for the past few months. The share of long-term unemployed continues to be at a historically high level, given the relatively low rate of unemployment.

Note: Since the labor market survey is conducted during the second week of the month and Hurricane Katrina hit during the last week of August, her effects on employment will not show up in this report until next month.
Heather Boushey is an economist at the Center for Economic and Policy Research in Washington, D.C.

CEPR’s Jobs Byte is published each month upon release of the Bureau of Labor Statistics’ employment report.