David Coates

The Recession May Be Over, but Unemployment is Not

The U.S. unemployment rate edged up to 9.9 percent in April, then fell back to 9.7 in May. Long term unemployment also worsened. In April, an extra 169,000 workers had been unemployed for more than 6 months: to bring the total to 6.7 million. The under-employment rate – people in part-time work who wanted full time – rose too: from 16.9 percent to 17.1. The result – 26.9 million workers remained unemployed or under-employed in the U.S. in April 2010.

  • In April 2010 the private sector added jobs – 231,000 of them. The public sector added 66,000 temporary job s to aid with the census; but state and local governments shed 6,000 jobs, the federal government 1,000, and 805,000 new workers entered the labor force. 34 states saw unemployment fall, including Michigan – which remains the worst performer, at 14 percent unemployed.
  • In May 2010 431,000 jobs were created, of which 411,000 were temporary jobs linked to the census. The decline in the unemployment rate was primarily due to 322,000 people leaving the workforce for a variety of reasons.

The full April data is at http://www.epi.org/publications/entry/jobs_picture_2010507

For an important study that underlines the depth of unemployment in the current recession – arguing that the deterioration in the job market is the worst in any recession for at least six decades, see Michael Elsby, Bart Hobijn and Ayesgul Sahin, The Labor Market in the Great Recession, NBER Working paper 15979, available at http://www.nber.org/papers/w15979. Normally US workers pick up new jobs faster than European workers, so the recovery from recession is faster. This is happening to a lesser extent this time: because of a slow-down in hiring, an extension of the length of unemployment, the erosion of skills that goes with that, and the weight of part-time workers seeking to upgrade to full-time work. It is happening less too because of the uneven impact of the recession – hitting industries like construction particularly hard, from which a full recovery soon is very unlikely.

One other interesting statistic in May: labor productivity for the first quarter rose by another 3.6 percent. The 2009 figure on labor productivity growth was 5.8 percent overall, and 6.9 percent in the last quarter.. Some of that rise may be illusory: the result of US companies’ moving production abroad – the US productivity figures are always slow to pick that up. And a lot of it may be temporary – the hustle factor caused by fear of job loss. It probably is: but right now, US workers – those employed – are working with an intensity way beyond the norm, paradoxically helping to prolong unemployment for those out of work. For companies that can squeeze more out of less do not hire more people – they just squeeze harder. Another reason why the growth figures improve but the employment figures do not!

David Coates holds the Worrell Chair in Anglo-American Studies at Wake Forest University. He is the author of Answering Back: Liberal Responses to Conservative Arguments, New York: Continuum Books, 2010.

He writes here in a personal capacity.

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