(Cue Maroon 5)
“When it gets cold outside and you got nobody to love”
The Cold, Hard, February Facts
- The unemployment rate was 9.7%, unchanged from January. 14.9 million people were unemployed and a net 36,000 jobs were lost.
- The underemployment rate was 19.8%, down from 19.9% in January (Gallup). Approximately 8 million people are working part-time for economic reasons.
- 6.13 million workers were unemployed for more than 26 weeks, down from 6.3 million in January (Gallup)
- The unemployment rate for people with a bachelor’s degree or higher was 4% and appeared to have just peaked. (The highpoint during the last recession was around 3%).
- There have been 8.4 million jobs lost during this recession. In addition, 2.7 million jobs that should have been created during the time period were not. Therefore, there is a current deficit of 11.1 million jobs. (NY Times).
What it Means
Once again the pundits on both sides tried to politicize the data. It is not great news, but it not alarming news either.
Back in October, I wrote that the experts were forecasting job growth to begin sometime between February and May of this year and unemployment to peak between 10-11%. Job growth should begin in March and unemployment may have topped out at 10.1% in October. So the forecasts appear to be very accurate and we are doing somewhat better than expectations.
The good news is that the employment situation appears to be bottoming out and is not getting any worse. There was an increase in job openings in January and layoffs were significantly lower. In addition, demand for temporary workers (leads demand for permanent workers by about four months) has been increasing for several months.
The bad news is that hirings have not increased. Companies are conserving cash and trying to squeeze more productivity out of current workers even as sales increase. Business confidence remains low.
A December Head Fake
The government reported a small net job gain in December. I also previously reported that two good friends received job offers in December after looking for over a year. In addition, there was an increase in people getting job offers in the job seeker groups that I belong to. All this positive data coming in the traditional worst month for hiring, led me to conclude that the job market was getting considerably better.
But it was just a “head fake”. My theory now is that many companies had job openings in 2009 that they delayed filling due to the struggling economy. They could afford to wait because there were many available applicants and the economy was recovering slowly. These job requisitions were set to expire at the end of the year, so many companies finally pulled the trigger in December. Job listings for larger companies have increased some so far this year, but hiring remains slow.
This is Not Your Father’s Recession
During previous recessions (before 2001), if your father was laid-off from the factory he collected unemployment until orders improved. He then went back to work at the same company, doing the same job.
This time, millions of degreed professionals have been downsized and will not be returning to their previous jobs. Many of these people have a bachelor’s degree or better, years of experience, and have been unemployed more than six months.
Commentators and analysts continue to write articles about the unemployment situation using historical data to reach their conclusions. But their conclusions are usually faulty because this recession is very different. The old rules no longer apply.
Most people don’t understand how difficult it is to get a job in the current market, although that is changing. A recent cartoon went like this:
Woman: “So what do you do for a living?”
Man: “I’m between jobs”
Woman: “Oh, so you’re optimistic?”
If you are a “good” candidate, it is taking about 8 to 14 months to find a new position (my analysis). This of course this can vary depending on personal factors, expertise and geography.
“How dare you say that my behavior is unacceptable
So condescending, unnecessarily critical”.
Some commentators have stated that the unemployment rate remains so high because extended unemployment benefits are acting as a disincentive for people to go back to work. While this may have been true at times in previous recessions, is not true in this one. The people in my job seeking groups are trying hard to find jobs, but there too few openings for professionals available.
“I have the tendency of getting very physical
So watch your step cause if you do you’ll need a miracle”
If you said to my job-seeking buddy Craig, “Hey why don’t you get off of unemployment and go find a job?” you had better be ready to either duck or run. Likewise, my friend Lori, who is a very pleasant soccer mom, might be tempted to split your goalposts.
Expect the job growth number in March to turn positive. Any impact of the February snow blast will be gone and there may even be some carry over. Construction jobs should also improve due to the weather. Economic growth should continue to add some jobs. Census jobs will add to the total (while some commentators are dismissing census jobs as special circumstances, I say thank God they are happening at a time people desperately need work).
Economists from IHS Global Insight and RBS Securities Inc. expect job growth of 100,000 to 200,000 a month to start soon and then increase to around 300,000 to 400,000 in Q4. While this is good news, the unemployment rate is still expected to be in the 9.0% - 9.5% range at the end of the year.
We’re still on a slow road to recovery.
“When it gets cold outside and you got nobody to love
You’ll understand what I mean when I say
There’s no way we’re gonna give up
And like a little girl cries in the face of a monster that lives in her dreams
Is there anyone out there, cause it’s getting harder and harder to breathe”