U.S. Economy

March Jobs Report: Still Stuck in Second Gear

by Diane Alter

April 4, 2014

The highly anticipated March jobs report out today supported what U.S. Federal Reserve Chair Janet Yellen said earlier this week: The job market is not back to normal and the Fed has more to do on the unemployment front.

March Jobs Report This morning, the U.S. government announced that the economy barely missed expectations of 200,000 new jobs in March 2014, adding 192,000 jobs. The unemployment rate remained unchanged at 6.7%.

The lukewarm announcement was cheered mainly for its revisions for previous months - revisions from the January and February jobs reports added 37,000 positions.

However, there isn't much reason to cheer, because the economy is still struggling to gain traction.

"The BLS jobs report released this morning shows an economy that has been stuck in second gear for months," Steven Pressman, Professor and Economics and Finance at Monmouth University in Long Branch, NJ, told Money Morning. "Since November, the U.S. economy has created a bit under 200,000 jobs each month and the unemployment rate has been steady at 6.7%. This report is consistent with and reinforces recent GDP reports showing the U.S. economy has been growing (a bit under 2% annually), but not growing fast enough (3-4%)."

U.S. March Jobs Report: Job Creation Too Slow

The U.S. jobs recovery is indeed moving at a snail's pace. It's the slowest on record since the Labor Department started tracking data in 1939.

Moreover, the United States hasn't endured such elevated long-term unemployment since the Great Depression.

The biggest hurdle has been an anemic economic recovery. The economy has only grown by an annual average of 2.25% since 2010. That's handily below the historic 3.3% pace of U.S. growth since 1929.

"We need to create around 300,000 new jobs each month in order to get the unemployment rate down to something approaching full employment," Professor Pressman continued. "Around 200,000 new jobs are necessary each month for our growing labor force. But the economy also needs to create jobs for millions of American currently unemployed. At present, we are not doing this."

Doubtful amid the Fed's quantitative easing tapering, and a heavy debt load saddling consumers, Professor Pressman "doesn't see who is going to help shift the economy into third gear and get unemployment down to [a healthy] 4%-5% anytime soon."

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Following are a dozen highlights from the March report.

12 Key Takeaways from the March Jobs Report

The private sector was responsible for all of the jobs gains in March, and private sector jobs are now back at 2008 peak levels. While that sounds encouraging, the growth doesn't factor in the growing population.

Professional and business services led job gains with 57,000. Education and health added 34,000. The leisure and hospitality sector added 29,000.

Construction continues to be a bright spot thanks to a pickup in new home building. Construction companies added 19,000 last month. Since January, a total of 37,000 construction jobs have been added.

Discouraging was the 1,000 job cuts from manufacturers. A cornerstone of innovation in our economy, manufacturing firms fund most research and development (R&D). And, the resulting innovations and productivity growth improve our standard of living. Also, manufacturing drives U.S. exports.

The federal government continues to trim headcount. Currently, there are 85,000 fewer federal government jobs than there were 12 months ago. "One factor contributing to inadequate job growth is that the government is not hiring," Professor Pressman explained. "All the job growth in March was due to the private sector. The federal government cut 9,000 jobs, which was countered by local government job creation. Given the dysfunction in Washington, and elections coming in November, this situation is not likely to change any time soon."

Average hourly earnings for all employees on private nonfarm payrolls fell by 1 cent to $24.30. That follows a 9 cent increase in February. Year-over-year, average hourly earnings have risen by a modest 49 cents, or 2.1%, not nearly enough to spur economic growth or meaningfully increase GDP.

The work week got only a tad longer, up 0.2 hours to 34.5 hours.

About 7.4 million people are working part-time, yet would prefer full-time work. That number is up substantially from four million before the recession. "The existence of such a large pool of 'partly unemployed' workers is a sign that labor conditions are worse than indicated by the unemployment rate," Yellen said in a speech Monday at a community-reinvestment conference in Chicago.

The labor force participation rate held nearly steady at a dismal 63.2%, a 35-year low. When the recession began, 66% of the working age population was part of the labor force. "Lower participation could mean that the 6.7% unemployment rate is overstating the progress in the labor market," Yellen added.

The rate of unemployment for adult men and women is now equal at 6.2%. While males gained ground, females lost some.

Some 10.5 million Americans remain without a job, and 36% have been without a job for at least six months.

A broader measure of joblessness, which includes part-timers who prefer full-time jobs and the discouraged who have giving up looking for work, plus the unemployed, ticked up to 12.7% from 12.6%.

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