From Despair to Hope Again: A Job-Market Tale

When you look past the splashy headlines, the new jobs report shows the same slow growth.

People visit booths of prospective employers during the Hiring Our Heroes job fair at the Washington Convention Center, on January 10, 2014 in Washington, DC.
National Journal
Catherine Hollander
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Catherine Hollander
March 7, 2014, 5:22 a.m.

The press loves to hype the fickle monthly jobs re­port. The past few months have shown the wild swings of emo­tion it can eli­cit as the head­line num­bers show signs of strength, then weak­ness, then strength again.

This Fri­day, the Bur­eau of Labor Stat­ist­ics re­por­ted that the eco­nomy ad­ded 175,000 jobs in Feb­ru­ary, best­ing eco­nom­ists’ ex­pect­a­tions of a roughly 150,000 payroll gain. Many had warned of down­side risks, giv­en Feb­ru­ary’s bad weath­er — which hit dur­ing the peri­od BLS con­ducts its em­ploy­ment sur­veys — and two weak labor-mar­ket re­ports re­leased earli­er in the week. At 8:30 a.m. Fri­day, it was as if Aunt Mil­dred, who had brought her fam­ous ham cas­ser­ole to the past few fam­ily gath­er­ings, sud­denly showed up with Ben & Jerry’s. Time to cel­eb­rate?

Let’s re­wind a minute: Back at the end of 2013, eco­nom­ists were etch­ing out their fore­casts for this year and see­ing rain­bows (such as there can be in the postre­ces­sion era) on the ho­ri­zon. Then, along came Old Man Winter, spoil­ing the party. Crummy jobs re­ports in Decem­ber and Janu­ary were blamed on severe weath­er, but they also raised ques­tions about wheth­er that un­der­ly­ing mo­mentum every­one had pre­dicted go­ing in­to 2014 was really there.

It was — and is — tough to tell. Teas­ing the pre­cise weath­er ef­fects out of the re­port is a dif­fi­cult task. Just ask BLS, which says so ex­pli­citly: “It is not pos­sible to quanti­fy the ef­fect of ex­treme weath­er on es­tim­ates of over-the-month change in em­ploy­ment,” the new re­port says. “What we need to do and will be do­ing in the weeks ahead is to try to get a firmer handle on ex­actly how much of that set of soft data can be ex­plained by weath­er,” Janet Yel­len, the Fed­er­al Re­serve chair, said at a re­cent hear­ing.

Now, some eco­nom­ists are point­ing to Fri­day’s re­port as evid­ence that the poor per­form­ance of the past few months was the res­ult of the weath­er after all, and the eco­nomy is due for a pay­back. “If the eco­nomy man­aged to gen­er­ate 175,000 new jobs in a month when the weath­er was so severe, once the weath­er re­turns to sea­son­al norms payrolls em­ploy­ment growth is likely to ac­cel­er­ate fur­ther,” Paul Dales, seni­or U.S. eco­nom­ist at mac­roe­co­nom­ic re­search firm Cap­it­al Eco­nom­ics, wrote to cli­ents.

The volat­ile head­line swings, as they change the nar­rat­ive, mask the slow, steady pace of growth all along. Monthly em­ploy­ment gains av­er­aged 174,000 in 2011, 186,000 in 2012, and 194,000 in 2013. The Feb­ru­ary num­bers are “slightly high­er than what fore­casters were ex­pect­ing, but for the Amer­ic­an work­force, this is not good news at all — at this pace, it will take more than five years to get back to prere­ces­sion labor-mar­ket con­di­tions,” Heidi Shi­er­holz, an eco­nom­ist at the lib­er­al Eco­nom­ic Policy In­sti­tute, said in a state­ment.

They also mask the de­press­ing un­der­ly­ing data points. A con­stel­la­tion of gloomy news lurked be­low the 175,000 gain: Teen un­em­ploy­ment climbed by 0.7 per­cent­age points to 21.4 per­cent in Feb­ru­ary. Black un­em­ploy­ment, at 12 per­cent, re­mains well above the na­tion­al rate of 6.7 per­cent. The ranks of the long-term un­em­ployed — those out of a job for 27 weeks or more — swelled by 203,000 to 3.8 mil­lion, even as their num­bers fell by 901,000 over the year.

Also note­worthy: The length of the av­er­age work­week edged down by 0.1 hour, maybe due to the bad weath­er. We’ll have to wait un­til next month to test that hy­po­thes­is. But the over­all story re­mains one of slow growth, one that the up! down! all around! head­line num­bers tends to hide.

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