2011 U.S. Job Forecast: Sunny or Not?
By Gary KaplanFebruary 2011
I consider myself a "glass half full" kind of thinker. As such, I choose to believe the latest news from the Bureau of Labor Statistics regarding the state of unemployment in the U.S. is positive.
Although high hopes for December's employment numbers were thwarted when the Labor Department reported disappointing job gains for the month, the unemployment rate took a surprising and very pleasant plunge.
The payroll number was a clear disappointment. The economy added 113,000 jobs in December--falling short of the 150,000 job gain predicted by most economists--and government continued to shed staff, cutting 10,000 workers.
In the meantime, the unemployment rate sank to 9.4%, its lowest level since May 2009. Baffled economists surveyed by CNNMoney were expecting the unemployment rate to ease to 9.7%, from 9.8% in the previous month.
While a sharply lower unemployment rate was a welcome surprise, some experts say that drop was mostly due to a shrinking workforce. Although we are getting more individuals employed it appears many people are still disappearing into the night. The overall participation rate in the U.S. labor force fell to a new recession low of 64.3%. About 260,000 adults dropped out of the labor force for various reasons, and were no longer counted as unemployed by the government.
Incredibly, the U.S. labor force is now smaller than it was before the recession started, though it should have grown by over 4 million workers to keep up with working-age population growth over this period, according to economist Heidi Shierholz of the Economic Policy Institute.
Plus, the number of under-employed for economic reasons (sometimes referred to as involuntary part-time workers, temps, consultants, and contractors) was essentially unchanged in December at 8.9 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.
While positive job growth still brings some hope for 2011, there's still a long way to go to recover the 8.5 million jobs lost since the Great Recession began. Overall, the economy rounded out 2010 with 1.1 million jobs added, the best year for hiring since 2007. And job growth is still trending upward, albeit very slowly, with an average of 128,000 jobs a month added in the last quarter of the year.
However, making any kind of dent in the current jobless rate is going to require the net addition of at least 135,000 jobs month after month.
The ADP National Employment Report recorded a surprising 297,000 job jump in private-sector employment in December. Manufacturing activity is up, retail sales are hearty, and overall GDP growth is on track to be a healthy 3% this year. Inflation is still quiet, and stocks are making a comeback.
Simply Hired, which aggregates job openings from employment websites such as CareerBuilder.com, company sites and newspapers, reports the site's leading indicator is "flashing green." Before the downturn happened, the company had 5 million job openings. This dropped to 2.1 million job openings in the first months of 2009, and of course, in the second half of 2009 the bottom fell out of the economy. The reverse is now happening. In the last six months Simply Hired is back to 5 million jobs in their database. So there are some reasons to be optimistic.
The National Association of Colleges and Employers says employers plan to hire 13.5 percent more new college graduates in 2011 than in 2010, and the Federal Reserve predicts that in 2011, the unemployment rate may drop below 9 percent for the first time since April of 2009--the job market will continue to be competitive this year.
The message here seems to be we're beginning to see improvement in the job market, and it looks to be slowly gaining strength in the coming year. The glass may still only be half full, but at least our thirst for job security, growth and prosperity is starting to be quenched.
