February 10, 2009
In Depth Review of the National Employment Situation
Highlights of the in depth analysis of friday's employment situation from the Center for Economic and Policy Research (CEPR), the Economic Policy Institute (EPI), and the Center for American Progress (CAP).
From Dean Baker at CEPR:
"The data in the household survey indicates an even more dire situation. The unemployment rate rose by 0.4 percentage points (pp) in January to 7.6 percent. The employment rate fell by 0.5 pp to 60.5 percent, a level that is already 0.7 percentage points the low hit in the 1990-91 recession. The 1.5 percentage point drop in the employment rate over the last three months is equivalent to a decline in employment of 2,800,000 people.
The sharper drop in employment implied by the household data could be attributable in part to the fact that the Labor Department imputed more jobs for new firms not captured by the survey in recent months than it did in the corresponding months for the prior year."
From Heidi Shierholz at EPI:
"The January decline in payroll jobs (along with a sizeable downward revision of previous month's estimates) brings the total jobs lost since the recession began in December 2007 to 3.6 million. As sobering as this number sounds, it actually far understates the true gap between how many jobs there are today and how many are needed. Simply to keep up with the ever-expanding population, the economy would have had to have added approximately 127,000 jobs every month over this period - or 1.7 million jobs in the 13 months since the start of the recession. Thus, the loss of 3.6 million jobs since December 2007 actually means the economy is now 5.2 million jobs below where it would need to be to have maintained pre-recession rates of employment for the American workforce."
Just to come back in this is why there is a lot of fear that the stimulus package that came out of the House was too small. That stimulus package would not create 5.2 million jobs. Unemployment will remain well above full employment. That matters because it means in the longer run slower growing wages and incomes and more troubles here in Pennsylvania. Of course that was the case with the House plan and thus prior to Arlen Specter and company cutting some of the most effective spending out of the Senate version of the bill. It is a mad mad world!
Of course absent stimulus we may be facing the prospect of deflation so it could always be worse.
"Real wages for those on the job have been rising due to falling prices. The quarterly average annualized rate of wage growth was 4.0 percent in January, but the Consumer Price Index fell at a 12.7 percent annual rate over the last quarter. Many workers may see that their take-home pay buys more than it did just a few months ago if this deflation continues, but the real value of their debts will rise, leaving most families no better off."
Posted by Price at February 10, 2009 01:13 PM