The U.S. unemployment rate held steady at 9.7% for the third straight month in March as the world's largest economy added jobs at the fastest pace in three years – the most-certain sign yet that the worst job market in a generation is finally improving and ending the "jobless recovery," economists say.
"This recovery is for real," Chris Rupkey, an economist at The Bank of Tokyo Mitsubishi UFJ Ltd., said in a statement.
Still, there's cause for concern.
The worst U.S. downturn since the Great Depression has eradicated 8.2 million jobs. On average, there are five or six unemployed people competing for each new job opening. At the present rate, it could be four or five years before the jobless rate drops back to the more-normal range of 5% to 6%.
Nationwide, hourly earnings averaged $22.47 for March, a decline of 2 cents from the month before. Stagnant wages are a major reason that consumer spending is also stagnant. And in an economy that draws 70% of its power from consumer outlays during normal periods, stagnant earnings act as a major drag on the economic rebound.
Money Morning Question of the Week: How confident are you in the U.S. jobs market? Do you feel that the U.S. employment outlook is getting better, getting worse, or essentially just holding its own? Are you in the job you want to be working in? If not, why not?
Here is what readers had to say about the jobless recovery and where U.S. employment is headed.
I am very glad not to be desperately seeking work right now. We hear a lot about how the economy is improving, but all I see is that it seems to not be getting worse as fast as it was. There are some job openings, but they require skills that are not common. And I certainly don't trust the official government job numbers, especially the ones that are updated monthly, with all the adjustments and such.
Actually, I see the government in a terrible bind, as the contradictions between the lies they are telling us appear to be on a collision course. On the one hand, they tell us that the economy is improving, and employment along with it, while the number that really appears to be going up is the number of discouraged unemployed, who have stopped even looking for work. On the other hand, they tell us that the economy is so weak that short-term interest rates [set by the Federal Reserve] will be kept at their current near-zero level for an extended time.
So is the economy improving or isn't it? If it is improving, then interest rates need to go up to encourage saving and investment, but an increase in interest rates would tank the housing market to a far greater extent than it is already tanked, taking the rest of the economy with it. But if the economy is not really improving, then what do they have to show for all the hundreds of billions of stimulus dollars that they have poured down so many rat-holes. [Other than greedy rats who paid themselves huge bonuses.] And with elections coming in November, they are desperate for a story to tell that makes them look like voters should re-elect them.
Personally, my guess is that employment numbers will look better for the next few months, especially as this is the time of year when seasonal employment tends to improve, but I would not be at all surprised to see a downturn, and possibly a serious one, before election day. And if a bunch of our elected representatives joined the cohorts of the unemployed at that point, I wouldn't grieve for them at all.
My Congressperson has arranged a job fair. She has found 60 companies that are looking for a total of 400 new employees. Sounds good until you realize this includes the Kansas City metro area. We are in need of 4,000 jobs.
I see no improvement. People are taking any burger-flipping job they can find.
Bitter Homes, Angry Voters
Employment is not improving in Central Florida. It stands at 12.3% and that is not accurate. In a recent survey in my 1,400-home subdivision, in almost every other home one wage earner had lost his/her job. If it was the husband and the wife was supporting the household, there was tremendous bitterness.
All I can say is Washington had better be careful because these people are ready to throw them all out.
Fudging the Numbers
Please name the companies, hospitals, etc. that are hiring. The unemployment rate is "adjusted." It seems suspicious 200,000 people become discouraged and are not counted, and 162,000 people find jobs – temp jobs that often pay less and last for a short period of time – but all you hear every time the unemployment rate is released from the so-called economists is that the labor number is a lagging indicator. Been hearing that for the last 14 months.
From my own experience the job boards have what I call "shell jobs" – the same job posts appear every month as current jobs. Very few companies are hiring; they are concerned about the healthcare bill [and] rising taxes (unemployment and property). [The] true unemployment [is] probably closer to 25%.
MM: Due to requests to include more on the Money Morning Mailbag Feature: Can Anyone Fix the Fiscal Mess?, here are a few more responses. Thank you for your continued comments and thoughts!
Think Before You Vote
I have just realized that the daily news never has any good news! It is always bad. This article on the "fiscal mess" just brings to light how bad of a situation we are all in. I think a big problem is people do not think when they vote! We just seem to 'flop' back and
forth between Republicans and Democrats and the mess just continues.
People should not just vote so they can tell their friends that they voted for the winner, they need to vote for someone that hopefully can fix problems and not spend us into bankruptcy. This whole thing is very sad for our young people – do they have any future?
The only way that we can really clean the government is by voting them all out!
Dear White House: Stop Spending
Here is a letter I have sent to the White House and various individuals who I am quite sure deposited it in their circular file box:
- Freeze all Federal spending and reduce the number of government employees at the Department of Education and the Department of Energy by 10%.
While this may seem counter-intuitive, the net result will be a perception by the world that we are indeed serious about getting our finances in order by prioritizing what we feel to be most important. And how many students has the Department of Education graduated from any school and how much energy has the Department of Energy produced?
- Cut personal and corporate taxes by 20% across the board with additional cuts to be followed on a yearly basis. And eliminate all capital gains taxes. The results will be astounding.
- Stop all hiring at the Federal level for five years. This will allow the attrition of Federal employees to catch up with available funds in pension plans without having to raise taxes
- Terminate the existence of Fannie Mae and Freddie Mac and reduce the funding of the Federal Housing Administration.
If we continue to allow these two [government-sponsored enterprises] to exist then the whole reason for a capitalist economy is undermined. People who can afford to purchase a home will do so and those who cannot will not – it really is that simple.
- Terminate all farm subsidies.
If farmers cannot exist on their own then they should not exist. New Zealand did this in 1984 and now their farm sector is now one of the strongest in the world and they are able to compete with anyone in the world. Less than 1% of their farmers went out of business after the government told the banks and farmers to "Work it out amongst yourselves!" when the subsidies were terminated.
- Raise interest rates by 1% per year.
Money goes where it is treated best! Period!
A lack of willingness to enact these different policies would seem to indicate that the administration is foregoing the opportunity to promote the entrepreneurial spirit that has made America great! No one will be willing to invest their money if they cannot get a decent return and no one will be willing to risk their future if they have no idea of what that future entails. No one likes uncertainty – especially those who are being asked to risk money and effort.
[Editor's Note: Thanks to all who responded to our fourth installment of the Question of the Week feature regarding the U.S. employment outlook. Be sure to answer next week's question: How do you feel about the status of financial reform? Has it gone far enough – will too much regulation crimp our free market system? Or does it need to go much further – and can the powers-that-be create an effective reform proposal?
Send your answers to firstname.lastname@example.org!
Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at email@example.com. Make sure to reference "question of the week suggestion" in the subject line. We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
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