January 2013 Jobs Report: 4 Reasons Unemployment Will Stay High

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The U.S. Labor Department released the January 2013 jobs report Friday, showing the unemployment rate inched upward from 7.8% to 7.9%.

Employers added 157,000 jobs in January, short estimates of 168,000, which would have kept the unemployment rate stable.

The jobs report included some good news: Revisions to last year's data, customary in January, show the U.S. added 335,000 more jobs than initially reported in 2012, bringing the monthly average for jobs gained to 181,000 from the 153,000 initially reported.

Employment gains for November and December were revised higher by a total of 127,000.

Contributing most to January payroll increases were the retail, construction and healthcare sectors. The government continued to shed workers, a trend that began four years ago.

But the employment outlook remains bleak. Joblessness has proved persistent, with the unemployment rate stuck above an unhealthy 7% for more than four years.

"The good news is that January's employment gains, coupled with large revisions to the prior months, may translate into more consumer spending power. The bad news is that unemployment remains stubbornly high," said Kathy Bostjanic, director of macroeconomics analysis at the Conference Board.

Jobs Report 2013: A Closer Look at U.S. Employment

The lackluster January jobs report highlights four of the biggest factors that will weigh on an economic recovery this year.

Here's a closer look:

  • Weak Labor Participation Rate

Since U.S. President Barack Obama took office in January 2009, the economy has created only an anemic 460,000 additional jobs.

The labor participation rate, the percentage of Americans who have a job or are looking for work, is at the same level as 1981, the start of a decade when some 12 million women entered the workforce looking for jobs.

The percentage of employed adult men 25-54, the biggest chunk of workers, has fallen from 90% in 1989 to 82% in 2012.

Meanwhile, the unemployment rate for teenagers aged 16-19 is a whopping 23.45%.

  • Underemployed

A new study from the non-profit Center for College Affordability and Productivity found that nearly half of working Americans with college degrees are settling for jobs for which they are overqualified. Others opt to extend their education instead of facing a very difficult job market.

The trend is expected to continue over the next decade.

"It is almost the new normal," Richard Vedder, an Ohio University economist and founder of the center, told USA Today.

  • Unwilling to Retire

Older workers are increasingly delaying retirement and continuing to work past age 65, staying in jobs that otherwise would normally be filled by younger workers.

According to data from the Census Bureau, the share of workers ages 65-plus in the labor force jumped from 12% in 1990 to 16% in 2010.

"We will have to work a lot longer to get by with less. It's just getting a lot more expensive to be old than it used to be," Olivia Mitchell, professor of economics and executive director of Pension Research Council at Wharton School of Business, told USA Today.

  • Obamacare and Budget Cuts

Also tempering hiring is the Affordable Care Act, or Obamacare.

Employers with more than 49 workers who don't offer a certain type of health insurance face penalties of $2,000 per full-time worker starting next year. Larger firms face even higher fines. Firms are bracing for the fines by laying off workers, implementing hiring freezes and slashing hours.

The steep spending cuts set to kick in next month have kept scores of employers from expanding, investing and adding workers. Many more have simply let people go in anticipation of the cuts.

The next jobs report for 2013 will be out Friday, March 1.

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  1. Adrian Blackwell | February 2, 2013

    America is made up of outstanding people that are resilient and bounces back. During many difficult time in the past; we have revived stronger than before. We need to invest in more innovative ideas, believe in our inter-strengths, and become a nation that produce.

  2. D.Schaedle | February 4, 2013

    We do bounce back, but that was with hope and opportunity, that's what we need nowadays. An internal desire to be better than another country we disliked in the 1960's, the USSR, fueled each of us to work together to squeeze each drop of opportunity from a depressing possibility of Communism overcoming US. In the 1980's microcomputer came about and we worked to beat Japan. Then companies subsidized by their gov't tried to beat us in US chip productuion. Now, it's ailing, and Chinese companies cyberwarfare US. Maybe we need a "'Apple' Cyber Security" company to keep hackers from our Federal Reserve, White House, other gov't agencies, and so on. We need a 'national obsessing condition' to take over our 'enigma image of the future' so we would work together toward a better America, for our children's future.

  3. D.Schaedle | February 4, 2013

    A compliment – Good Work! Monday Morning Newsletter for the effort as well as the many sources shown for this article and others that work together to overwhelmingly show the facts written here.

  4. 48ozhalfgallons | February 6, 2013

    High unemployment and underemployment means high productivity which is good for investment. Wall Street would be even happier with 10%+ unemployment and ongoing QE.

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