Job Growth Slows in April

May 04, 2007

Heather Boushey

May 4, 2007 (Jobs Byte)

By Heather Boushey

Wages are growing slower than inflation and weekly nominal earnings fell in April.

The economy added 88,000 new jobs last month and the unemployment rate rose from 4.4 to 4.5 percent. Job growth for the prior two months was revised down by 26,000, putting average job growth over the last three month at just 118,000 jobs per month.

While health care continued to show strong job growth (adding 37,000 jobs), there were job losses in retail (26,000), manufacturing (19,000), and construction (11,000).

The past few months have seen wide oscillation in the reported number of jobs in construction. This sector lost 11,000 jobs in April and 77,000 in February, but gained 34,000 jobs in January and 50,000 in March. The job gains may be due to a warm winter in many parts of the country, but the losses are the effects of falling sales in the housing market. The sharpest declines in construction have been in residential construction and contracting, with heavy and civil engineering being the only sub-sector to see job gains.

The job losses in retail trade follow relatively strong job gains since January. Including April’s decline in jobs, retail trade has added 47,400 new jobs since December. The temporary help sector, an indicator of whether or not employers intend to hire in the future, is also showing job losses and is down by 10,000 jobs compared to last year.

The number of hours of work per week fell in April from 33.9 to 33.8. Hours of work have fluctuated between 33.8 and 33.9 for over a year and remain below trends from the peak of the tight labor market in the late 1990s when the typical production worker worked 34.5 hours per week. The index of aggregate weekly hours also fell last month, from 107.3 to 106.9. This is a relatively sharp one-month decline, but the index remains higher than it was in January and February.

Real wages are no longer growing. Over the past quarter, wages grew at an annual nominal rate of 3.6 percent, more than a full percentage point below inflation. The drop in hours worked and the weak hourly wage growth have led to an atypical decline in average nominal weekly earnings (seasonally adjusted), from $583.42 in March to $583.05 in April. Nominal weekly earnings fell in less than a quarter of the months since the beginning of 2000.

The household survey shows a sharp one-month drop in labor force participation, from 66.2 to 66.0 percent. The number of people who are out of the labor force rose by 343,000 and 374,000 people in January and February, by only 5,000 in March, and by an exceptionally large 611,000 in April. Compare this to 2006, when the number of people out of the labor force did not significantly increase. The BLS measures labor force participation as being either with a job (for at least one hour per week) or actively searching for work. The sharp increase in the number of people who are no longer searching for work is possibly artificially keeping the unemployment rate low.

The employment rate also fell sharply last month, from 63.3 to 63.0 percent, and is now 1.7 percentage points below its peak in April 2000. The one-month decline was larger for women than for men. Among women aged 20 and over, the employment rate fell from 58.5 to 58.1 percent, while among men, it fell from 73.0 to 72.9 percent.

The decline in the employment rate among women is concentrated among white women, whose employment rate fell by 0.5 percentage points last month while black women’s employment rate fell by only 0.2 percentage points. Among women, the decline is largest among those aged 35 to 44, who have lost 119,000 jobs (nearly a full percent) over the past year. There are clear indications that this is a non-voluntary decline since the unemployment rate for this group rose from 3.1 to 3.5 percent last month.

Black teen unemployment shot up in April, from 25.0 to 30.6 percent. This series fluctuates greatly month-to-month, but this is an exceptionally large one-month increase.  

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. 

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