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July 18, 2011

Employment Numbers Still Grim

July 18, 2011

Last month, I posted about how cuts in state and local government jobs were offsetting private sector employment growth.  With the release of the June employment figures last week, the story got even bleaker. Job growth in June was a meager 18,000 jobs, and the April and May numbers were also revised downward. Dashing expectations of a turnaround, overall employment gains were even smaller – basically flat for two months, largely due to declines in government employment.

Private employment job growth fell in June from a revised gain of 73,000 in May to 57,000 – with most gains coming from job growth in health care and leisure and hospitality.  But these gains were mostly offset by declines in government jobs, especially in local education.  These figures are seasonally adjusted – so they take account of dips in education employment in summer and upticks in employment in parks and museums. The raw numbers are even starker – even larger gains in leisure and hospitality offsetting declines in both public and private education.

Monthly Employment Gains Flat Due to Declines in Government Job Sector, June 2011

Monthly Employment Gains Flat Due to Declines in Government Job Sector, June 2011

 

The July education drops are likely to be even more dramatic as last year’s Federal education jobs bill expires. That bill allocated an additional $10 billion in federal funds to retain or create education jobs in the 2010-2011 academic year.

The Bureau of Labor Statistics (the source of the graphs) released summary information that further breaks down information by industry.  Some other highlights (or lowlights):

Mining and logging jobs have recovered the jobs lost in the recession.  Currently, they’re 20,000 above June 2008 levels. In contrast construction employment is still 30% lower than at its peak 2006 level, and hasn’t changed in the past year.  Manufacturing employment has been flat, which almost counts as good news given its long-term downward trend –a 30% decline since June 2001.

Unsurprisingly, given soaring health care expenditures and changing demographics – employment in health care has added 369,000 jobs since February 2010 – the nadir of private sector employment.  Over 20 percent of nonfarm jobs added since then have been in health care.  The employment gain in private health care and social assistance is offset by an equal decline in private education positions.

While financial service jobs have declined by 15,000 over the past month, they have been relatively stable over the last year and are 9 percent below their 2006 peak.  In contrast, professional and business service employment increased by 12,000 jobs last month, and has increased by 3 percent or 485,000 positions since the prior year – largely due to increases in administrative and temporary help positions in early 2010.  Indeed these jobs made up a large portion of the employment bump experienced this winter.

The government employment picture is different. Public sector employment stayed strong longer than private sector employment but has been losing jobs since autumn 2008.   Last month, both federal non-postal positions and local education jobs fell by 10,000 each.  State jobs have fallen too, but most losses have been in non-education positions.  This pattern, especially the decline in education jobs, largely reflects smaller declines in these positions earlier in the economic cycle.

With state and local employment expected to stay weak for years, current federal negotiations over the debt ceiling and federal spending will also likely translate into more job losses.  The only break to this less than sunny government jobs outlook is that state officials and public sector workers seem to be more willing to re-open bargaining agreements and substitute lower salary increases and increased cost-sharing of benefits for fewer layoffs.   For example, in New York, a second public-sector union agreed to wage freezes to avoid layoffs.  A first step to sustainable jobs growth might be for us to stop shedding jobs.

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