Though employment losses have slowed in May, many sectors have already lost large numbers of jobs over this recession and therefore have fewer jobs left to lose.
The economy lost another 345,000 jobs in May. For the first time in a year, there were upward revisions to the past months’ data, with March and April’s combined employment revised upward by 72,000 jobs. The establishment survey reports 1.5 million jobs lost over the last three months. With this report, employment is now down 6.0 million jobs from its peak in December 2007– the 4.3 percent decline reflecting the largest relative loss of jobs in over 50 years. With fewer jobs left to lose, job loss is now occurring only at the fast pace of September and October of 2008.
The household survey showed a sharp rise in the unemployment rate to 9.4 percent from 8.9 percent in April — the highest rate in nearly 26 years. After showing a gain of 120,000 jobs in April, the household survey showed a loss of 437,000 jobs in May.
The number of nonagricultural workers employed part-time for economic reasons rose 102,000 in the month. The broad U-6 measure of unemployment increased to 16.4 percent, up from 15.8 percent in April. Combined with a three-month nominal wage growth of less than 2 percent annualized over the previous three months, workers’ purchasing power is nearly flat. The employment cost index grew at a 0.7 percent annualized rate in the first quarter of 2009, slowing from the 2.8 percent rate over 2007 and 2008.
Though job losses continue in most sectors of the economy, the losses have slowed in several areas. Construction lost 59,000 jobs in May, compared to 108,000 the previous month. Trade, transportation and utilities lost 54,000 jobs compared to 115,000 in April. Job loss in employment services slowed considerably. After shedding 62,500 jobs last month, employment services jobs declined by only 11,200 jobs in May and now stands 23 percent below its level of May 2008.
Education and health services employment added 44,000 jobs last month; leisure and hospitality grew by 3,000. These were the only major sectors adding jobs in May. The government sector lost 7,000 jobs in the month, entirely at the federal level. State and local employers added 8,000 jobs, indicating that the stimulus package appears to be having some effect keeping jobs that otherwise would have been lost.
Motor vehicles and parts, both in manufacturing and dealerships, continue losing jobs at comparable rates (29,800 for manufacturing and 8,900 for dealers) to the previous month, though layoffs at Chrysler will likely not appear in the data until the summer.
In the household survey, unemployment hit prime-age workers hard in May, jumping 0.6 percentage points to 8.4 percent among those aged 25-54. Of these, the younger workers aged 25-34 have seen their unemployment rate rise to 10.5 percent up from 9.7 percent in April and 9.0 percent in March — a rise of 1.5 percentage points compared to 0.9 percentage points in the overall rate.
The employment-to-population ratio fell by 0.2 percentage points in May to 59.7 percent, the lowest level in the last 25 years. While the EPOP for men fell by only 0.1 percentage point, the recession has been increasingly hitting women harder than men. The employment-to-population ratio for women fell 0.3 percentage points to 54.8 percent.
The unemployment rate among African-American workers actually fell 0.1 percentage points in May to 14.9 percent following a 1.7 percentage point spike the month before, but then employment fell slightly, sending the employment-to-population ratio down 0.2 percentage points to 53.6 percent.
Unemployment among workers with college degrees continues to rise, jumping 0.4 percentage points in May. At 4.8 percent, the unemployment rate is now twice that of a year ago, when it stood at only 2.3 percent.
Adjusted for age composition and survey, the unemployment rate would now be equal to 10.7 percent, compared to a post-World War II peak of 10.8 percent in 1982. When internationally comparable data is released next month, the rate of unemployment in the United States will almost certainly be higher than that in the Euro Area.
Overall, the jobs picture is mixed at best. Though employment losses have slowed in May, this may reflect that many sectors including construction, manufacturing and employment services have already lost large numbers of jobs over this recession and, therefore, have fewer jobs to lose. Unemployment continues to rise and workers’ purchasing power is not growing. Continuing deterioration in the housing market and planned layoffs in the automobile sector indicate that the current high rate of job loss may yet continue through the summer.
David Rosnick is an Economist at the Center for Economic and Policy Research (CEPR) in Washington, DC. He has a Ph.D. in Computer Science from North Carolina State University and an M.A. in Economics from George Washington University. This article was published by CEPR on 5 June 2009.