June 10 2013

The Jobs Report: Running in Place

Patrice J. Lee

The labor force is in essence running in place like the cartoon character Wile E. Coyote whose legs spun really fast and kicked up a cloud of dirt, but took him nowhere.

The economy added 175,000 jobs in May, that’s up from April but don’t celebrate too quickly. The unemployment rate remained largely unchanged and indicates that above 7% unemployment is here to stay for the foreseeable future.

Economists see the addition of so many private sector jobs as a positive sign of an improving economy and that may be true. However, when we dig deeper into the numbers we discover findings that cause concern.

Temporary agencies are experiencing a boom in hiring as companies appear to be avoiding on-boarding full-time hires opting instead for temporary workers.

And what’s driving those jitters? Obamacare. Businesses cite concerns about the cost of healthcare reform rules set go take effect in 2014 that is keeping them in suspense. Thank you Mr. President! Congress doesn’t escape blame either. Uncertainty makes it difficult for business to plan hiring decisions.

And this should be no surprise. It’s cheaper to hire a temp worker through an agency and provide her no healthcare benefits. Companies avoid the mess of retracting employee benefits down the line or eliminating positions entirely and –I am no human resources expert- probably avoid penalties for not providing coverage to their workers.

And something more worrisome is also at work. The labor force is stagnant. The percentage of civilian workers participating in the labor force has remained unchanged and that concerns the Labor Department:

"The participation rate is still quite low, even after adjusting for the aging of the U.S. workforce, so we can expect the unemployment rate to stay in this range -- near 7.5 percent -- throughout the rest of the year if employment growth continues at the modest and steady pace of about 175,000 new jobs per month," Bronars said.

Bronars said employment growth that maintains a constant employment to population ratio is "not ideal" given that the economy is still recovering from a very deep recession.

Blacks continue to fair the worse among demographic groups at 13.5% up from 12.7% over the past several months. Black Americans are uniquely feeling the impacts of unemployment more deeply and should be embracing policy changes for all workers.

But let's face it. With so much other news distracting Americans, including that the government has been spying on my Facebook chats and perusing my vacation photos, this is bound to fly under the radar.

For those who are unemployed and desperately looking for work, these numbers are more than just digits, they're their livelihoods.

Following his election victory, President Obama won a dubious distinction when he became the president with the highest unemployment rate to win re-election since Franklin D. Roosevelt.

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