The government’s employment report for December confirmed that even the mediocre job gains reported in October and November were too good to last. According to the Labor Department’s establishment survey, only 18,000 jobs were created in December. That brings the average since September down to 84,000 per month. Between 100,000 and 150,000 jobs must be created each month to keep up with growth in the working age population.
Although the December report triggered gloom on Wall Street, here are five reasons why, on Main Street, the situation is far worse.
The establishment survey is generally regarded as the most accurate estimate of job creation and loss. For technical reasons, however, it is likely that the Labor Department, as in previous years, has overestimated monthly job gains by at least 25,000. When the figures are corrected they will show an actual loss of jobs in December. The Labor Department’s figures for 2006 were subsequently revised downward by an average of 25,000 per month. Because of reporting methods used, it is likely that 2007 figures have been similarly overstated.
Younger workers who are just coming into the work force or who frequently look for new jobs are having trouble finding work. Each month since September there have been 43,000 fewer jobs for workers aged between 20 and 55 while the number looking for work has grown by 35,000. This doesn’t factor in the plight of college graduates who borrowed $40,000 per year to get their education having to select from a variety of jobs that pay $20,000 or less.
The official unemployment rate had been inching up since its 4.4 percent low in March. But in December there was a big jump from 4.7 percent to 5.0 percent, indicating the job situation has taken a sharp turn for the worse. For Latinos it is 6.3 percent, and for African Americans it reaches 9 percent, more than double the rate for whites. A more realistic estimate would show that African American unemployment is close to 20 percent.
Some 49,000 construction jobs were lost in December and are down 195,000 for the year. Construction jobs are now being lost in the commercial as well as residential sectors. With new home construction down more than 40 percent from its peak and still plunging, construction lay offs have just begun.
Much of the job growth was in health care and restaurants, known for their lower wages. Manufacturing lost an average of 15,000 jobs per month in 2007, with 31,000 lost in December. And “good union jobs” are even more scarce. In 2006 for the first time, the 11.7 percent of manufacturing workers in unions was below the 12 percent union membership rate for all workers. Figures are not yet available for 2007, but are likely to continue the trend.
Memo to candidates for president, congress, governor, legislature, sheriff, dog catcher:
It is the economy, … !