Friday, August 1, 2008
The New York Times has a couple of articles on the jobs front, including a story discussing the cutting of employees' hours that I've raised previously. But first, the July unemployment numbers are out. Although not as bad as many had predicted, 51,000 jobs were eliminated--raising the national unemployment rate to 5.7% (from 5.5% in June). Wages continue to stagnate as well, with average non-managerial salaries up 2.8% from last year, yet inflation growing at 5% during the same time period. Second, the Times has an article (written a day before the July numbers were released) on the effects of employers' forcing employees to work part-time:
The number of Americans who have seen their full-time jobs chopped to part time because of weak business has swelled to more than 3.7 million — the largest figure since the government began tracking such data more than half a century ago. The loss of pay has become a primary source of pain for millions of American families, reinforcing the downturn gripping the economy. Paychecks are shrinking just as home prices plunge and gas prices soar, furthering the austerity across the nation. . . .
On the surface, the job market is weak but hardly desperate. Layoffs remain less frequent than in many economic downturns, and the unemployment rate is a relatively modest 5.5 percent. But that figure masks the strains of those who are losing hours or working part time because they cannot find full-time work — a stealth force that is eroding American spending power.
All told, people the government classifies as working part time involuntarily — predominantly those who have lost hours or cannot find full-time work — swelled to 5.3 million last month, a jump of greater than 1 million over the last year. These workers now amount to 3.7 percent of all those employed, up from 3 percent a year ago, and the highest level since 1995. “This increase is startling,” said Steve Hipple, an economist at the Labor Department.
The loss of hours has been affecting men in particular — and Hispanic men more so. Among those who were forced into part-time work from the spring of 2007 to the spring of 2008, 73 percent were men and 35 percent were Hispanic. Some 28 percent of the jobs affected were in construction, 14 percent in retail and 13 percent in professional and business services, according an analysis by Mr. Hipple. . . .
Many experts see the swift cutback in hours as a precursor of a more painful chapter to come: broader layoffs. Some struggling companies are holding on to workers and cutting shifts while hoping to ride out hard times. If business does not improve, more extreme measures could follow.
This perfectly illustrates how a single variable can't capture the entire picture of the labor market. As many workers could tell you, the fact that unemployment is still low historically doesn't mean that things are hunky dory.