Largest Cuts in Local Government Jobs in 30 Years

The economy lost 95,000 jobs in September — 77,000 of which were temporary Census positions — while the unemployment rate held at 9.6 percent.  Including downward revisions in payroll employment for July and August, there are 110,000 fewer jobs than reported one month ago.

Though the overall rate of unemployment did not change in September, different populations were not similarly affected by employment changes.  The employment-to-population ratio was unchanged at 58.5 percent.  While white adults saw relatively little change in their EPOPs (-0.1 percentage points for men, 0.1 percentage points for women), the EPOP for black men aged 20 and over fell 0.5 percentage points in the month and 2.6 percentage points for African-American teens.

The fall in the latter is particularly striking as only 16.2 percent of black teens were employed as recently as May.  Ten years ago, 29.5 percent of black teens were employed compared to 11.7 percent in September.

The number of workers involuntarily employed part-time rose by 612,000.  Compared with last month, 353,000 additional workers stated that they were working part-time on account of slack work or business conditions.  The number of long-term unemployed (27 weeks or longer) fell along with the number of unemployed 5-14 weeks.  The rise in unemployment spells both short (less than 5 weeks) and medium (15-26 weeks) indicate that the falls may be short-lived, resulting from the temporary rise in hiring earlier in the year.

Though the private sector created 64,000 jobs in September, non-Census employment in federal, state, and local government fell by 82,000.  Almost the entire loss of non-Census government jobs came at the local level, with 49,800 jobs lost in education and 26,300 lost in the rest of local government.

In addition, this employment report announced the preliminary revisions to the payroll jobs numbers for March.  According to the estimate, early this year there were 366,000 fewer jobs than previously reported, with particularly large downward revisions (-176,000) to employment in construction and manufacturing and a proportionately smaller 144,000 downward revision in trade and transportation.

In September, 21,000 construction jobs were lost while another 6,000 were lost in manufacturing.  The private employment gains were overwhelmingly in the service sector.  Health care continues to be one of the main drivers of job growth, adding 23,900 jobs in September.  That sector has grown by 78,700 positions since June, compared to 48,700 for the previous three months.

Employment services grew by 28,200 jobs in September.  While the return to positive growth in temporary help is a positive sign, it is below the rate of job creation to be expected in a robust recovery.  From September of 2009 through June of 2010, employment services added more than 46,000 jobs every month, but only 11,200 in total over the last three months.

Food service employment grew by 33,900 in September — the fastest growth in any month since 2006.  If this rate of job creation continues in the coming months, it may be a sign of improvement, but the average hours of nonsupervisory workers in the sector fell back to 24.7 per week — just 0.1 hour above the record low of 24.6 last October.

Overall weekly hours remained flat, and the average hourly wage ticked up by $0.01.  The hypothesis that unemployment is structural, rather than resulting from a lack of demand in the economy, remains weak.  Though the hourly wage in transportation has climbed $0.19 in the last two months, average weekly hours have fallen by 0.2 over that time.  Hours have fallen in manufacturing, construction, and mining.  Hours in wholesale trade have risen by 0.5 in the last three months, along with a $0.17 increase in hourly wage, yet the number of nonsupervisory jobs in wholesale have been falling.  It is unclear how the loss of wholesale positions can be attributed to a lack of appropriate skills.

With the sharp rise in involuntary part-time work, cutbacks in local government, and the low percentage of unemployed who left their jobs voluntarily (5.4 percent, down from the already low 5.9 percent last month), there are few hopeful signs in this month’s report.  Job creation in the private sector, though positive, is far below the rate needed to significantly reduce unemployment.

David Rosnick is an economist at the Center for Economic and Policy Research in Washington, DC.  This article was first published by CEPR on 8 October 2010 under a Creative Commons license.

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