This month’s jobs report has a little something for everyone. It is disappointing that this report was so much worse than last month’s. The job-market picture had been brightening until December, when 85,000 jobs were lost. However, revisions in this report showed that jobs actually increased in November, the first sign of job growth since 2007.
On the down side, work hours and overtime remained flat, but temporary help continued to surge, which is a precursor to sustained job growth. There were also signs that other parts of the business sector are seeing brighter employment prospects. Health care is no longer the only sector of the U.S. economy that is adding jobs; even the financial sector showed small signs of job growth.
The biggest surprise is the large drop in labor-force participation: 661,000 workers exited the labor force, which means that the participation rate is at its lowest level since August 1985. Most of the workers who left the labor force (499,000) were adult males over the age of 20. This dropped the adult-male participation rate by half a percentage point, the steepest drop in more than 20 years and one of only a handful of times that the adult-male rate has dropped so much in the last four decades. The unemployment rate will climb if and when these workers re-enter the labor force.
Overall, this report is disappointing in that job growth has not begun. It is likely that job growth will commence in the next few months, but the rate of hiring is unlikely to be sufficient to bring down the unemployment rate. The fundamental strength of the U.S. economy will be enough to overcome the anti-growth policies of the current administration. Job creation will spring from the resilience of the private sector, instead of the stimulus bill.
– Rea Hederman Jr. is assistant director of the Center for Data Analysis and senior policy analyst at the Heritage Foundation.