Jobs and wages picture remains bleak for millions in US

Ironically, the decline in the official percentage of jobless resulted largely from the gloomier overall employment outlook, i.e., a larger number of people discouraged from even embarking on a search for work leads to a falling unemployment rate and official claims that the “economy is on track.”

The US labor force participation rate fell in January to 65.8 percent, the lowest since May 1988 and 1.5 percent lower than its most recent peak in April 2000. This means a decline of some 3.4 million people on the job market since that latter date.

Wall Street analysts had predicted an increase of 200,000 new jobs in January. Rick Egelton, of BMO Financial Group, told Reuters, “[It’s] certainly weaker than expected, quite a bit weaker than expected. It suggests that employment is continuing to expand at a moderate pace and we are not getting the boost to employment that we would have gotten given the low value of the dollar and the still relatively low interest rate environment.”

Other economists cited in the media were blunter. Marie-Pierre Ripert, from IXIS Corporate and Investment Bank, told AFP, “The decline in the unemployment rate ... is due to a fall in the labor force participation rate, which is not good news.”

“The labor force is shrinking,” Peter Morici, economics professor at the University of Maryland’s Robert H. Smith School of Business, commented to Reuters. “The economy is not creating enough good paying jobs, causing workers to quit looking for jobs altogether.”

He added, to AFP, “The economy is slowing at an alarming pace. The primary culprit is the growing trade deficit, which is now more than 5 percent of gross domestic product. This is reflected in the declining fortunes of manufacturing.”

Steven Wood, chief economist at Insight Economics, told a reporter, “The recent pace [of job growth] doesn’t appear to be enough to generate a self-sustaining economic expansion.”

The weak growth in January jobs permitted the Bush administration to escape becoming the first since Herbert Hoover to show a net job loss over its four years in office. This is due to a growth in government employment; the total of private sector jobs is down by more than 700,000 since Bush took office.

The current economic recovery remains the worst since the Bureau of Labor Statistics began collecting data at the end of the Great Depression. A negligible 62,000 jobs have been added since March 2001. If the historical norm had held, the present so-called recovery should have generated 7.5 million more jobs than have materialized.

BLS data for January revealed that employment growth was concentrated in services. Business services, for example, added 25,000 jobs, but 17,500 of them were in temporary help, “a sign,” comments the Economic Policy Institute (EPI), “that employers remain uncharacteristically cautious regarding permanent hires at this stage of the recovery.”

Manufacturing jobs suffered their fifth straight monthly decline. “After reaching an unemployment trough in February 2004, manufacturers added 85,000 workers through August. The trend has since turned downward, and 61,000 jobs have been lost,” notes the BLS unemployment summary.

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http://wsws.org/articles/2005/feb2005/jobs-f08.shtml