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Labor market remains stuck in neutral

EPI News
August 18, 2010
Labor market remains stuck in neutral
On August 6, the U.S. Labor Department reported the unemployment numbers for July, showing a job market on pause. In her analysis of the monthly data, EPI economist Heidi Shierholz noted that the unemployment rate held steady at 9.5%, but it would likely have risen if nearly 200,000 workers hadn’t left the labor force last month. Barring changes in temporary Census employment, the labor market added only 12,000 jobs, with the private sector adding 71,000 and government losing 59,000 jobs, as state and local budget problems cause an ongoing loss of government jobs. “With a jobs deficit of nearly 11 million jobs, this rate of growth is nowhere near what is needed to reach recovery in the labor market any time soon,” Shierholz said.The June Job Openings and Labor Turnover Survey (JOLTS) report by the Bureau of Labor Statistics further underscored the stagnation in the labor market, showing that there are still five unemployed workers per available job. Shierholz notes in her analysis of the report that this ratio does not measure the number of applicants for each job. There may be throngs of applicants for every job posting, since job seekers apply for multiple jobs. The 5-to-1 ratio means that there is literally only one job opening for every five unemployed workers (that is, for every four out of five unemployed workers there simply are no jobs). Given this, it is unsurprising that jobless workers continue to be unable to find work for long periods. In July, 6.6 million workers had been unemployed for over six months, which was 44.9% of all unemployed workers. To put this number in perspective, the high of all prior post-war recessions was 26.0%, set in the summer of 1983.An Economic Snapshot by EPI Vice President Ross Eisenbrey and policy analyst Kai Filion highlighted the accelerating pace of job loss by state and local governments. A total of more than 300,000 state and local government jobs have been lost since August 2008, with 48,000 payroll jobs cut last month alone. The report estimates that legislation passed by the Senate last week, and subsequently signed into law by President Obama, would slow this tide of unemployment, with Medicaid-related aid saving approximately 158,000 jobs and education-related aid saving another 161,000 jobs in public schools.

Copyright © 2010 Economic Policy Institute. All rights reserved.

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