Unemployment Jumps to 8.5 Percent, Economy Sheds 663,000 Jobs
The age-adjusted unemployment rate is already above the 1982 level.
The unemployment rate jumped to 8.5 percent in March as the economy shed another 663,000 jobs according to the Bureau of Labor Statistics. With the job loss reported for March, and upward revisions of 84,000 for the prior two months, the economy has lost an average of 684,000 jobs per month since November 2008.
The job losses continue to be heavily concentrated in construction and manufacturing, which lost 126,000 jobs and 161,000 jobs in March, respectively. The job losses in construction were widely spread across sectors as the non-residential sector is now losing jobs even more rapidly than the residential sector. Construction employment has fallen by 1,264,000 since its peak in 2007, according to the establishment survey. The household survey shows a decline in construction employment of 2.3 million jobs, accounting for close to 40 percent of the drop in employment during the downturn. The difference is likely explained by undocumented workers who don’t show up on payrolls.
The disproportionate job loss in construction and manufacturing is reflected in the sharp gap that has opened up between the unemployment rates for men and women. In March, the unemployment rate for men jumped by 0.7 percentage points to 8.8 percent. It is now 1.8 percentage points above the 7.0 percent unemployment rate for women. A year ago, the unemployment rates for men and women were an almost identical 4.6 percent and 4.5 percent, respectively. The employment rate for men is now 68.2 percent, far lower than at any other point in the post-war era. In the 1981-82 recession, it bottomed out at 70.5 percent.
While the most disadvantaged groups are feeling the effects of the downturn the hardest – the unemployment rate for African Americans is now 13.3 percent, which is also the rate for people without high school degrees – this recession is hitting everyone. The unemployment rate for workers with college degrees rose by 0.2 percentage points to 4.3 percent in March, almost a full percentage point above the peak for college grads in the last two recessions. While this rate is still just half of the overall average, it is double the 2.1 percent unemployment rate faced by college grads just a year ago. In other words, a college graduate is more than twice as likely to face unemployment today than a year ago.
Much of the impact of the downturn continues to be felt in shorter hours. The number of people involuntarily working part-time rose by another 400,000. Since the beginning of the downturn, this number has risen by 5.4 million workers. The reduction in hours is also reflected in the aggregate weekly hours series in the establishment data. This index dropped by 1.0 percent in March. It is down by 6.4 percent since the downturn began, the equivalent of the loss of 8.8 million jobs with no reduction in hours.
There is little basis for any real optimism in this report as job losses continue to spread across sectors with the rate of decline accelerating almost everywhere. The financial service sector lost 43,000 jobs in March. Trucking lost 14,900 jobs, bringing job losses since October to 74,500 or 5.4 percent of employment in the sector. Retail trade lost 47,800 jobs.
Jobs in employment services fell by 88,400 in March, roughly the same rate of job loss in the prior two months. This sector has shed 905,000 jobs since the beginning of the downturn. State and local employment fell by 12,000 in March, a number that would have been worse without the stimulus package. Even the health care sector is weakening, adding just 13,500 jobs, compared with a 35,000 monthly average over the last year.
The employment diffusion indexes (showing the percentage of industries where employers expect to add workers over various time periods) are all at or near their lowest levels since the series began in 1994. Many analysts had seized on the fact that several February data reports were somewhat better than the January reports as evidence of an incipient economic turnaround. The improvement was almost certainly due to unusually bad weather in January depressing activity. This report shows the economy continues to sink rapidly with little hope of any improvement in the immediate future.
Dean Baker is the Co-director of the Center for Economic and Policy Research. CEPR's Jobs Byte is published each month upon release of the Bureau of Labor Statistics' employment report. For more information or to subscribe by fax or email contact CEPR at 202-293-5380 ext. 102, or chinku [at] cepr [dot] net.