Labor Market Shows Limited Gains
April 1, 2005
By Heather Boushey
Employment grew by 83,000 new jobs in March after accounting for a 27,000 downward revision in February's employment level. Job growth has slowed in recent months. Over the past four months, the economy has gained an average of 158,000 jobs each month, less than the 178,000 average over the past year.
The gains in employment were clumped in a relatively small number of industries, with many industries losing jobs. Construction employment grew by 26,000 in March, after rising by 31,000 in February. Professional services increased by 27,000, and state governments added 6,000 new jobs. Retail trade lost 9,700 jobs last month; since November, this sector has added only 30,000 jobs. Apparel lost 4,500 jobs in March, losing 4.2 percent of total employment since November while manufacturing lost 8,000 jobs.
Wages have continued to lag behind inflation. Over the past quarter, the annualized nominal rate of wage growth was only 2.3 percent. Wages for workers in financial activities, professional and business services, wholesale trade, and education and health have grown at an annualized quarterly rate of above 4.0 percent, while wages for workers in natural resources, construction, nondurable goods, utilities, and leisure and hospitality grew by less than 2.0 percent.
There are indications that employers are not feeling pressure to bring on new workers. Hours remained flat last month, holding constant at an average of 33.7 hours per week. The index of hourly employment grew slightly from 101.7 to 101.8. Further, the temporary help sector lost 3,500 jobs last month. Over the past four months, this sector has only grown by 16,800 jobs. During the previous economic boom, this sector saw gains of that magnitude monthly, not quarterly. Typically, employers begin to increase the hours of current employees or hire temporary workers before hiring new permanent staff, so these are both indications of labor market weakness.
Unemployment fell to 5.2 percent, down from 5.7 percent a year ago. Although unemployment has fallen, the employment-to-population ratio (the share of individuals with a job) has only risen slightly over the past year, from 62.2 percent to 62.4 percent. At the peak in 2000, this ratio was at 64.7 percent.
White workers have seen larger increases in their employment rates, compared to blacks. White men's employment rate was 73.2 percent in March, 2.1 percentage points below it peak in 2000, while 63.4 percent of black men are at work, 4.2 percentage points below their peak of 67.6 in 2001. There is similar gap among women: at 56.9 percent, white women's employment rate is only 1.6 percentage points below its peak, while black women's employment rate is 58.2, 3.8 percentage points below its peak.
There are still indications that individuals are having a difficult time finding employment. The share of the unemployed who are long-term unemployed (out of work and searching for a new job for at least six months) moved back up to 21.5 percent which is where it had been in November 2004. Further, the share of individuals working part-time for economic reasons rose in March to 22.3 percent of all part-time workers, although it remains below its January level.
The unemployment rate for women maintaining families has risen since November 2004, from 7.7 to 8.0 percent, and has been at or above 8.0 percent since January. The unemployment rates of both married men and women have fallen since November 2004, and are now both at 3.0 percent.
Older workers continue to see greater employment gains than younger workers. Over the past year, workers over age 55 have had 41.7 percent of the employment gains, workers aged 45 to 54 have had 35.8 percent, and workers aged 20 to 24 have had only 3.4 percent. However, the share for workers aged 55 and over has fallen considerably since last year: from March 2003 to March 2004, they had 108.5 percent of the employment gains.
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.