Monday, April 23, 2018

U.S. job growth slows in April

U.S. employers are creating jobs at less than half the pace they were when this year began, according to a government report released Friday.

The addition of just 115,000 jobs in April was disappointing, but economists urged no panic just yet. Maybe the unusually warm winter had encouraged companies to do their spring hiring a little early, they offered in one of several theories. Maybe high gas prices, now falling, temporarily discouraged job growth. Better yet, maybe this latest report understates how many jobs were added, since the initial estimates for earlier months have since been revised upward.

But no matter which hopeful explanation you choose, America's 13.7 million jobless workers still look pretty discouraged.

Many economists had been predicting that strong job growth early this year would persuade many people sitting on the sidelines to re-enter the job market.

Instead, workers continue to peel off the labor force. An estimated 342,000 Americans dropped out of the job market altogether in April. That is why the unemployment rate fell to 8.1 percent from 8.2 percent — not because more workers found jobs.

It's just one month of data, and the survey numbers are not precise. Still, the figures fit into a longer-term trend.

The share of working-age Americans who are either working or actively looking for a job is now at its lowest level since 1981, when far fewer women chose to do paid work. The share of men taking part in the labor force fell in April to 70 percent, the lowest figure since the Labor Department began collecting these data in 1948.

The decline in labor force participation is partly because baby boomers are hitting retirement age. But economists had expected the wave of retirements to be at least partly offset by the number of workers rejoining the labor force as the economy improved.

"There were a lot of younger people who had gone back to school to get more education and training, and we thought we'd see more of them joining the workforce now," said Andrew Tilton, a senior economist at Goldman Sachs. Instead, the number of young people in the labor force also fell.

"May, June and July — the months when people are typically coming out of schooling — will be the big test," he said.

With the average duration of unemployment now at 39.1 weeks, many people have simply given up looking for work. Many of them might have given up months ago but had clung to the job search because doing so kept them eligible for extended unemployment benefits. As more and more workers roll off those benefits, they are stopping their job searches and dropping out.

It's unclear whether workers will continue dropping out, said Alan B. Krueger, chairman of President Barack Obama's Council of Economic Advisers.

"I think you're going to have crosscurrents," he said. "One factor is that extended benefits have kept people in the labor force. But then some of the reforms that the president proposed and that Congress has passed will encourage the unemployed to search for a job."

Rather than prodding employment growth, the government is actually providing a drag on the economy.

Government spending has fallen for six straight quarters as Recovery Act funds have been exhausted and state and local governments have struggled with tax revenue shortfalls. Accordingly, the public sector has been shedding workers relatively consistently since the recovery official began in mid-2009, with the exception of a brief spike of temporary hiring during the decennial census. Last month, governments eliminated 15,000 jobs.

Private companies added 130,000 jobs over all, with professional and business services, retail trade and health care doing the most hiring.

"My guess is the weather made job growth look too strong in the first couple of months, and now it looks too weak as payback for the warm winter weather," said Paul Ashworth, chief U.S. economist for Capital Economics. "It'll probably settle somewhere in between."

Averaging the strong months of total job growth in January and February with the weaker ones in March and April, the economy has been adding about 200,000 jobs a month this year.

Job growth of any kind is obviously welcome. That pace, however, is not nearly fast enough to recover the losses from the Great Recession and its aftermath in the foreseeable future. At this rate, it would take more than two more years just to return to the prerecession peak in employment, though the country should actually have even more jobs given population growth and the current size of the economy.

Today the U.S. economy is producing more goods and services than it did when the recession officially began in December 2007, but with about 5 million fewer workers.

"We have to reserve judgment until we get the final revisions on these numbers," said John Ryding, chief economist at RDQ Economics. "I'm not trying to be Pollyannaish, but there is enough in this report to suggest that the economy isn't necessarily slowing."

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