U.S. Adds Jobs in May, but Private Hiring Disappoints/A Jobless Rate Still Unaffected by New Hiring

U.S. Adds Jobs in May, but Private Hiring Disappoints
By CHRISTINE HAUSER
Copyright by The The New York Times
Published: June 4, 2010
http://www.nytimes.com/2010/06/05/business/economy/05jobs.html?hp


Employers added 431,000 nonfarm jobs nationwide in May, the biggest increase in a single month in a decade, the Labor Department said Friday. But the bulk of the growth was in government jobs, driven by hiring for the 2010 census, and private-sector job growth was weak.

The unemployment rate fell to 9.7 percent nationwide, from 9.9 percent in April, the department said.

The figures for May represented the fifth consecutive month that payrolls have risen, but fell below analysts’ expectations that 540,000 jobs would be added to the economy. The shortfall sent stocks down sharply on Wall Street. Most of the private-sector gains were in manufacturing, but over all, the figures suggest that nongovernment hiring was weak.

Altogether, 411,000 of the jobs added were for census workers whose positions will disappear after the summer.

President Obama tried to put a positive spin on the jobs report, telling workers at a trucking company in Hyattsville, Md., that the addition of 431,000 new jobs in May demonstrated that the economy was “getting stronger by the day.”

Mr. Obama acknowledged that temporary workers for the Census Bureau accounted for many of the additional jobs, but he said that hiring in the private sector was also growing. He noted that there has been jobs growth for the last five months.

“These numbers do mean that we are moving in the right direction,” Mr. Obama said. But, he added: “There are going to be some ups and downs.”

In April, nonfarm payroll employment grew by 290,000, but the unemployment rate rose that month because of a surge in the labor force.

“The U.S. employment data was disappointing,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in a statement. Mr. Chandler noted that private-sector job creation, a crucial measure, reached only 41,000, compared with expectations for 180,000 and a three-month moving average of 155,600.

“The fact that the unemployment rate ticked down is not really good news,” he added, “as the decline in unemployment was not a function of more jobs but a reflection of people leaving the work force.”

The May figures suggest that the job market still has a long way to go. The economy has to add more than 100,000 jobs every month to absorb the growth in the working-age population. And they are joining a labor pool that is already swollen with 15 million Americans looking for work.

About eight million people have lost their jobs since the start of the recession in December 2007.

“These new data do not present a picture of a healthy private-sector growth, and nothing closely resembling the job growth needed to dig us out of our very deep hole,” Lawrence Mishel, the president of the Economic Policy Institute, said in a statement.

In addition, the quality of the jobs was important as well.

“You would need to be producing 150,000 to 200,000 jobs a month to be making a dent in this,” said Doug Roberts, chief investment strategist for Channel Capital Research.

“If you are getting people back to work but they are earning less, they are spending less,” Mr. Roberts said. “It does not affect the underlying condition.”

Economists are hoping that the recovery of the job market will lead to improved consumer spending, which accounts for 70 percent of the economy.

But there are issues of how sustainable the job growth is. The Labor Department report said that private-sector job growth was strongest in the temporary help and manufacturing sectors. There was a net gain of 31,000 temporary service jobs in May, meaning employers are not entirely convinced they want to commit to permanent hires. And the census positions are temporary.

Employment by all levels of government rose by 390,000 in May. Jobs with state and local governments, which are grappling with budget cuts and the prospect of job losses, decreased by 22,000 in May.

Analysts said that the figures for May showed how important government spending has been in supporting the domestic economy.

“Without the government, the total number of payrolls would have barely increased by enough to cover population growth,” said Guy LeBas, the chief fixed-income strategist for Janney Montgomery Scott, in a research note.

The new job figures suggest that there are still headwinds to face, some of them from abroad, as the economic recovery progresses.

One area of potential growth is in the manufacturing sector. Manufacturers are slowly making gains in their businesses and that could lead to an uptick in future hiring.

The Manufacturers Alliance/MAPI, a trade association, said this week that the sector was rebounding, based on low consumer inventories and strong gains in exports. Manufacturers are “bullish on job growth in a sector that is not known for job creation,” said Daniel J. Meckstroth, the group’s chief economist. “The supply-chain pipeline is filling with orders and manufacturing firms are reluctantly, but out of necessity, adding staff,” he said.

Investors have been watching the job figures for signs of health in the economic recovery. Corporate earnings for the first quarter have been generally stronger than expected, which raises hopes for more jobs. But there are still uncertainties from the European debt crisis hanging over the financial sector, and how that will affect credit availability. A further strengthening of the dollar could lead to export stagnation and hit the bottom line of companies that rely on sales abroad.

President Obama called for an extension of unemployment benefits, and Secretary of Labor Hilda L. Solis called on Congress to also extend health coverage.

“We continue to push for programs to help unemployed workers make it through this difficult time,” Ms. Solis said in a statement. “I call on Congress to extend the unemployment insurance and COBRA subsidy provisions in the Recovery Act through the end of the year.”

The Labor Department figures show that the number of those unemployed for a long time continued to grow. Almost 6.8 million had been out of work for more than six months in May, and the average length of time that people remained out of work grew to 34.4 weeks, up from 33 weeks in April. When that figure reached 31.2 weeks in March, it represented the longest period since 1948, when the government started to keep track of such records.

The so-called underemployment rate, however, fell to 16.6 percent in May from 17.1 percent in April. The rate includes people with jobs whose hours have been cut, and those who accepted part-time jobs because they could not full-time work. The rate was 16.9 percent in March.

That means 8.8 million people were working part-time in May who preferred full-time work, compared with 9.15 million in April.

Anthony Watler of Rosedale, Queens, might find himself in that category. This week Mr. Watler, 58, put on a fresh shirt and suit and went to a Suffolk County job fair to look for work as an accountant, a job he lost when he was laid off in 2008, earning $80,000 a year.

After working in a temporary part-time job, Mr. Watler went on unemployment in January and uses the $425 a month in benefits while drawing down from his retirement account to make monthly mortgage payments of $2,000.

He has searched for work on the Internet and gone on job interviews.

“I always feel hopeful,” Mr. Watler said. “Until I get home and a couple of weeks pass and I don’t hear anything.”

On Wednesday he filled out an application and left his résumé at the job fair. He was told by one company that it did not need an accountant now, but he said he was willing to do whatever that business or any other had to offer.

“I would accept anything that is above unemployment,” he said.


Helene Cooper contributed reporting.



A Jobless Rate Still Unaffected by New Hiring
By MOTOKO RICH
Copyright by The New York Times
Published: June 3, 2010
http://www.nytimes.com/2010/06/04/business/economy/04workers.html?th&emc=th


SCHAUMBURG, Ill. — After hemorrhaging jobs for months, the economy is finally starting to add them. Yet the unemployment rate is not really budging because of people like Regina Myles.

Ms. Myles, 51, has been out of work for three years. After a grueling job search yielded 150 interviews but no offers, she simply stopped looking last fall. Then this spring, with a $3,000 government-funded grant to help pay for a training course at a local beauty school in this Chicago suburb, she began applying for jobs online and in stores again.

“I just know if I am given this chance to finish this course I can make it,” Ms. Myles said after practicing a facial on a classmate at the International Skin Beauty Academy. “I feel like it is my time now.”

Millions of people became so discouraged during the brutal recession that they gave up the job search altogether. Some entered training programs to redirect careers; others focused on caring for family members. Some college graduates, despairing of their prospects, enrolled in graduate school, rather than hunt for jobs.

Now many of them are beginning to look for work again, encouraged by four consecutive months of job growth and reports of a strengthening economy. But the initial return to the labor force may prove dispiriting, since so many people are already chasing too few jobs.

Because the government does not count people as unemployed unless they say they are actively searching for work, many discouraged people have been hiding in the shadows.

Heidi Shierholz, an economist at the Economic Policy Institute in Washington, estimates about 2.4 million “missing workers” either left the labor force or did not enter it in the last 28 months. That is on top of the 15.3 million people who are officially counted as unemployed.

Although economists expect the jobs report scheduled for release on Friday to show that employers added perhaps half a million jobs in May, that kind of growth would have to be sustained for some time to absorb the backlog.

“The problem is if they come back into the labor force because they perceive that jobs are being offered again, but they come in at a faster rate than those jobs are really being offered,” said Ian Shepherdson, chief United States economist at High Frequency Economics.

In other words, just because it has rained for a few days does not mean the drought is over.

In April, those people who started looking again helped push the unemployment rate to 9.9 percent, from 9.7 percent in March and close to this recession’s peak of 10.1 percent last October.

If, as some economists predict, the unemployment rate edges up or remains stubbornly high, that could prove a political problem for the Obama administration heading into the fall midterm elections.

To a certain extent, the bad news is also the good news. The fact that people are looking for work again “is a vote of confidence in the overall economy,” said Ken Goldstein, an economist at the Conference Board.

Ms. Myles, who speaks in a low timbre and is quick to smile, is trying to remain optimistic during her renewed job hunt.

After a bitter divorce in 2007, she lost her job managing a tax preparation office that she ran with her ex-husband for eight years. To supplement $900-a-month alimony payments, she applied for everything from secretarial positions to fry cook at a McDonald’s. She tried for so many jobs online, she said, “I think my résumé is on YouTube at this point.”

Last fall, she thought she was finally close to getting hired when she was called back for a third interview for a clerical job at a pharmaceutical company.

When it did not work out, she hit bottom. For weeks, she sat at home, crying and wondering how she would pay her rapidly accumulating bills.

Around the holidays, a neighbor told her J. C. Penney was hiring, and Ms. Myles decided to dip her toe back into the job market. She still did not have any luck, but early this spring, she pulled together the application for a government grant to help pay for beauty school.

When she graduates in October, Ms. Myles expects her new skills will help her find a job. “People have a tendency to figure out a way to do our beauty products,” she said.

In the Chicago area, which lost 360,000 jobs — or about 8 percent of its jobs base from the beginning of 2008 through 2009, according to an analysis by Moody’s Analytics — those re-entering the market confront a sobering landscape.

At a job fair last week in Palatine, another Chicago suburb, Matt Landmeier, a recruiter for Just Energy, a local natural gas and electricity supplier, collected 110 résumés from a line of half-haggard, half-hopeful candidates. A majority told him they had been out of work a year or longer.

Recruiters and economists worry that those who quit the labor force for a while will have difficulty competing with younger workers or people who have been out of work for only a short period.

Even with a robust recovery that creates three or four million jobs in the next year, said Lawrence F. Katz, professor of economics at Harvard, “most of those jobs will go to new entrants and short-term unemployed people.”

That concern is not lost on Roman Landa, a former mortgage broker in Glenview, another Chicago suburb, who suspended his job search in frustration early this winter after applying for nearly 700 positions in three years.

Because he has been out of finance for so long, he fears it is getting harder to go up against younger workers. “It’s like a boxer who is closer to retirement thinking he is as good as he was when he was 20 years old,” he said.

Mr. Landa, 36, who stayed home with his six-year-old son for two months without looking for work, started searching again in April. He has a promising lead, but if he does not receive an offer soon, he plans to enlist in the Army. “I need to take care of my family,” he said.

In some industries, the outlook is improving enough for re-entrants to find jobs. In April, manufacturers added 44,000 jobs, the largest increase since 1998. In Rockford, a manufacturing outpost west of Chicago, Donald Ritter, who was laid off 14 months ago, recently found a temporary job operating a machine for a hydraulics company.

Mr. Ritter, a boyish 52, had stopped submitting applications in the fall, when the want ads dried up. “I was not applying for work because there was no work,” he said.

Last month, he noticed an advertisement for eight immediate openings at the hydraulics firm, and pounced. He started there a few weeks ago at $13 an hour, a significant cut from the nearly $20 he was making a year ago. “Essentially, I am just going to get caught up by the time I am supposed to retire,” he said.

Ms. Myles, too, is discouraged by job prospects that will barely cover her expenses. But on a recent afternoon, she was determined not to lose hope again.

After finishing classes at the beauty academy, she drove to a nearby strip mall and dropped into an outlet of Tuesday Morning, a retailer that sells closeout housewares. A manager directed her to a computer kiosk in the corner.

In response to the question “What are your hourly rate expectations?” Ms. Myles quipped, “$4,000 an hour?” but typed in $12.

Once she finishes beauty school, Ms. Myles figures that at the least, she can administer facials and wax treatments from home.

For now, she is on the hunt. After finishing at Tuesday Morning, she spotted a Barnes & Noble across the parking lot. “I think I’ll go apply there,” she said, and sped off.