Felix Salmon

No hiring yet

By Felix Salmon
January 8, 2010

Today’s payrolls report is entirely consistent with the kind of recovery where the employment situation is going to remain grim even if and when corporate profits start picking up. I like the fact that the unemployment rate for adult men, at 10.2%, is down 0.4 percentage points from its October peak. But total underemployment — the famous U-6 — is still extremely and stubbornly high at 17.3%, and the total number of unemployed persons, at 15.3 million, is double what it was at the start of the recession in December 2007.

Manufacturing employment is still falling, while temporary employment is rising; the workweek is still at an all-time low of 33.2 hours. Those workers are going to be asked to put in more hours per week before anybody starts hiring again in large quantities. Meanwhile, the people who hire in small quantities — small and medium-sized businesses — are still largely cut out from the credit markets, which means they have to hire people out of new revenues, instead of creating new revenues by hiring people.

The markets of course are concentrating on the headline payrolls figure, which went down rather than up in December, after going up rather than down in November. That’s a game which is interesting only to traders. The bigger picture, however, is important. And it shows a US workforce which is underemployed and looking at jobs which, when they do exist, are insecure and often temporary. Capital took its lumps in 2008 and the early months of 2009; it then recovered astonishingly quickly. It’s labor which is suffering the real hangover.

3 comments so far | RSS Comments RSS

“It’s labor which is suffering the real hangover.”

Funny thing how that happened…because it wasn’t labor that got drunk.

Posted by maynardGkeynes | Report as abusive

It’s not clear that the slow pace of lending to small enterprises is because of tight supply. Many seem to have adopted a wait and see attitude re: revenues before incurring more debt.

Posted by Mega | Report as abusive

Payroll employment in December 2009 is a shade below 131 million, down from a little more than 138 million in December 2007.

But payroll employment growth between 2000 and 2007 was well below the long-term (1950 – 2007) trend. Had we grown at trend through the end of 2009, the US economy would have about 150 million jobs. The economy is nearly 20 million jobs below its long-term trend.

If we start adding jobs now, and if employment growth is 50% above the long-term trend (2.65% per year, instead of 1.75% per year), it will take us until March 2011 to get back to where we were in December 2007–which was below our long term trend.

Getting back to trend actually seems all but impossible.

Posted by DonCoffin | Report as abusive

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