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Recession Takes Hold in the Job Market |
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From Economic Policy Institute: Payrolls were down by 80,000 in March, the largest loss in five years, while January and February's initially reported losses were revised downward by an additional 67,000 jobs. Since hiring in the government sector is less susceptible to cyclical swings in the overall economy, private sector job patterns provide a clearer signal of the weakening labor market. Officials often date a recession as beginning at or near the payroll employment peak. The increase in the unemployment rate is also important, particularly as regards the trend in labor force participation. In February, despite large job losses from the household survey, unemployment ticked down slightly because hundreds of thousands of people left the labor force (note that only those seeking jobs are counted as unemployed). Last month, in contrast, the labor force grew by over 400,000---monthly changes from this survey are notoriously volatile---and unemployment went up as new entrants, re-entrants, and job losers competed for fewer available jobs. This last point regarding job losers is also a notable recessionary indicator (see chart). Health care services are generally considered to be "inelastically demanded," i.e., spending on health is non-discretionary, and there is also considerable demographic pressure as the population ages. This is the first cycle on record marked by a decline in the employment rate. It is also a potent indicator of the weakness of labor demand over the cycle, and one reason why workers' bargaining power was never strong enough to create much real wage pressure during this period. There is some evidence in today's report that the weakening job market is leading to slower wage growth.
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