The latest assortment of government data tells different stories about the strength of the economy, providing no guarantee that we are yet experiencing a self-sustaining, robust jobs recovery.
The good news: State-level data show signs of recovery
State-level data released this week by the Bureau of Labor Statistics show that most states have been experiencing the steady progress towards economic recovery seen nationally. Over the four-month period from October 2011 to January 2012, every state except New York experienced a reduction in its unemployment rate. Over the course of a year (from January 2011 to January 2012), seven states experienced job growth exceeding 2.0 percent, while North Dakota experienced growth of 5.7 percent. Notably, five states (Alaska, Mississippi, Missouri, Rhode Island, and Wisconsin) lost jobs over this period, led by Wisconsin’s loss of 12,500 jobs. (Click here for interactive state maps.)
Despite these generally positive trends, four states and the District of Columbia have unemployment rates at or above 10.0 percent (led by Nevada at 12.7 percent), while 11 states plus the District of Columbia have unemployment rates of 9.0 percent or higher.
“States looking to further spur economic growth should invest more significantly in infrastructure, such as transportation networks, schools, and broadband, while avoiding budget cuts that would impede economic recovery today and could compromise future economic prosperity,” wrote EPI’s Douglas Hall, director of the Economic Analysis and Research Network.
The not-so-good news: Low level of voluntary quits should temper recent optimism about the labor market
Through examining voluntary quits, this week’s Economic Snapshot provides further evidence that the country’s labor market is not yet out of the woods. Voluntary quits, defined as workers who voluntarily leave their jobs, are high when job opportunities are plentiful and employed workers have the flexibility to look for jobs that pay better and more closely match their skills and experience. During downturns, on the other hand, the number of voluntary quits drops as job opportunities become scarce. The Snapshot shows that the number of voluntary quits is still more than 30 percent below the pre-recession level—and has seen no improvement since last summer.
More of the same: Job-seekers ratio remains unchanged
Finally, Tuesday’s release of the latest Job Openings and Labor Turnover Survey by the Bureau of Labor Statistics showed decreases in both job openings and hires in January. However, the job-seekers ratio—the ratio of unemployed workers to job openings—was 3.7-to-1 in January, unchanged from the revised December ratio.
“The softness in January’s job openings is inconsistent with the strength of January’s employment and unemployment report,” explained EPI labor economist Heidi Shierholz. “These inconsistencies underscore that it is too soon to declare that we have entered a self-sustained period of robust job growth.”
Brad Plumer of the Washington Post cited Shierholz’s analysis for his Wonkblog piece “Why are wages still stagnant? Blame the labor market”:
“There are still 3.7 job seekers for every available employment opportunity. That’s down considerably from the brutal 6.7-to-1 ratio seen in July, 2009. But as Heidi Shierholz of the Economic Policy Institute points out, the current ratio is also higher than at any point during the 2001 downturn. Across just about every industry, competition remains intense for a limited number of jobs, which means that employers are under less pressure to offer higher pay in order to entice prospective workers.”
EPI in the news
Shierholz’s analysis of last Friday’s release of the Employment Situation Summary by the Bureau of Labor Statistics was also picked up by multiple national media outlets, including the Washington Post, NPR, McClatchy, Huffington Post, and CNBC.
- Speaking to NPR’s Scott Neuman, Shierholz explained why the labor market still needs to gain many more jobs to return to its pre-recession health, and why it’s difficult to predict when this will occur. “We don’t have some historical perspective to compare this to and go, ‘OK, we know from experience that when the unemployment rate gets to X, or the number of jobs gets to whatever, that’s when people will start coming back,’” she said.
- And Shierholz told the Huffington Post’s Lila Shapiro that although we are seeing job growth, “it’s still a hellish job search out there” for job seekers.
EPI President Lawrence Mishel’s latest research on young workers’ declining wages continues to inform the national economic conversation. Mishel’s findings were most recently cited by the New York Times,CBS News, Huffington Post, and Think Progress.
- From the New York Times editorial “Better Numbers on Jobs”:
“Years into a weak labor market, and with years to go before full recovery, the scars are becoming all too apparent. Recent data from the Economic Policy Institute shows that the inflation-adjusted hourly wage of college-educated men aged 23 to 29 dropped 5.2 percent from 2007 to 2011, and for female college graduates of the same age, 4.4 percent. Joblessness and wage declines are also pronounced for those with only a high school education. For those men aged 19 to 25, wages fell 8 percent from 2007 to 2011. For those young women, the decline was 3.1 percent.”
- CBS News’ MoneyWatch: “Recent college graduates have had a hard time landing jobs and those that have jobs, are earning less. The Economic Policy Institute found that the average inflation-adjusted hourly wage for male college graduates aged 23 to 29 dropped 11 percent over the past decade. For female college graduates of the same age, the average wage is down 7.6 percent.”
- Huffington Post: “A new analysis from the Economic Policy Institute shows what a lot of younger Americans have probably noticed for themselves: even if you’re lucky enough to have a job, it’s still tough to get ahead. Over the last decade, wages for younger male college grads have plummeted by 11 percent, while women college grads saw their paychecks drop by 7.6 percent.”
- And Think Progress: “Not only has the Great Recession been bad for workers entering the workforce, but as the Economic Policy Institute noted, the entire last decade has essentially been lost in terms of entry-level wages.”
As the curtain comes down on 2011, it is still very difficult to determine where the US economy is headed. It seems like every week we have yet another series of contradictions. For example, here are the top headline articles taken from the pages of CIN’s Economy Section over the weekend of December 17-18:
- Fixed mortgage rates drop again to record lows;
- U.S. Economy Showing Growth, But Vulnerabilities Remain Abroad and at Home;
- Job market brightens as unemployment claims sink;
- More hunger, homelessness seen in ’12;
- Defaults down, credit companies may issue more cards;
- New Foreclosure Wave is Coming;
- Census shows 1 in 2 people are poor or low-income;
Now we defy anyone to make a firm prediction about the direction our economy will take in the new year, based on this sampling of recent headlines.
Wall Street’s volatility would seem to indicate that the Street’s wizards also share some apprehension on the state of the economy as we enter a new year. Recognizing this, your CIN editors keep this issue clearly in focus in our Economy Section.
Here at CIN we track the actions, reactions and ups and downs of politics and government, Wall Street, banking, consumerism and other related areas that generate news, research and commentary impacting community development, housing, credit, economic justice and you.
Reports from the Labor Department, actions of the Federal Reserve, and new laws passed by Congress are just a few of the items monitored and reported on in this special CIN Section.
The US economy is complex, difficult to comprehend, and sometimes puzzling, but it does impact are daily lives and our futures. It will also be the subject of numerous political commentaries as we enter a Presidential Election Year.
You’ll need a dependable source to cut through the red tape and the politics to present timely, factual information regarding our economy. CIN is always prepared to be that source for you. Now here’s a closer look at those seemingly contradictory headlines we listed earlier in this alert:
Fixed Rate Mortgage Rates Again At Historic lows
(USA Today) The average rate on the 30-year fixed mortgage has dropped back down to 3.94%, a record low set earlier in the fall. These historically low rates offer a great opportunity for those who can afford to buy or refinance.
TD Economics: U.S. Economy Showing Growth, But Vulnerabilities Remain Abroad and at Home
(Source: TD Bank) Despite encouraging signs of progress over the last few months, the U.S. economic recovery remains vulnerable, according TD Economics an affiliate of TD Bank. TD Chief Economist Craig Alexander says that despite some massive headwinds, the U.S. economy has proven to be surprisingly resilient.
Job market brightens as unemployment claims sink
(Source: Los Angeles Times) The outlook for the U.S. job market is looking brighter.
Far fewer Americans are seeking unemployment benefits than just three months ago, a sign that layoffs are falling sharply. The number of people applying for benefits has dropped to 366,000, the fewest since May 2008. If the number stays that low consistently, it would likely signal that hiring is strong enough to lower unemployment.
More hunger, homelessness seen in ’12
(Source: Chicago Tribune) A survey of 29 cities shows hunger has risen in most of them in the past year and is expected to increase in 2012 as the United States faces a sluggish economy. Homelessness also rose an average of 6 percent for the surveyed cities, with the increase in homeless families far outpacing the number for individuals.
Defaults down, credit companies may issue more cards
(Source: Boston.com) Credit card defaults dropped so sharply this year that banks may pick up their pace of opening new accounts in 2012. Potential customers with moderate credit scores should find cards easier to obtain in the coming year.
New Foreclosure Wave is coming
(Source: CNBC) Despite a seasonal slowdown in overall foreclosure activity, and a process still impacted by the “robot-signing” processing scandal, the U.S real estate market is about to be hit by another surge of bank repossessions, according to a new report from the online foreclosure sale site RealtyTrac. As banks resubmit millions of documents and courts begin hearing cases again, the backlog of over four million delinquent loans will start surging through the pipeline again.
Census shows 1 in 2 people are poor or low-income
(Source: Boston.com)Squeezed by rising living costs, a record number of nearly 2-in-1 Americans have fallen into poverty or are scraping by on earnings that classify them as low income. The latest census data depict a middle class that’s shrinking as unemployment stays high and the government’s safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families.
We cannot underestimate the impact the economy has on our lives. Knowledge is power — and CIN’s special section on the economy is designed to empower you with the ability to comprehend what’s happening on Wall Street and Main Street. It can be easily accessed from the top of our CIN Home Page. Read it every day and learn what needs to be known about the economy.
- The Biggest Business Stories Of 2011 (huffingtonpost.com)
- 30-year fixed mortgage rate falls to 3.94% (seattletimes.nwsource.com)
- What’s Ahead For Mortgage Rates This Week : December 19, 2011 (clewismortgage.wordpress.com)
- Hiring Probably Failed to Cut Joblessness: U.S. Economy Preview – Businessweek (skillsinfo.wordpress.com)