Job Growth Continues Positive in March, But Do Public Sector Layoffs Threaten Longer Term

Employment had respectable gains in March, with all 216,000 new jobs coming from the private sector.  The growth helped to extend a continuing decline in unemployment rates--both for new unemployment claims (U3--the one typically used in media discussions on employment) and for the more comprehensive (and realistic, I think--U6) "Total and Marginally Unemployed".  The two unemployment rates are now under 9 percent and 16 percent, respectively.

Here's a chart showing where we are currently on both unemployment measures (click on graph for larger, interactive version).

Reuters reporting on today's numbers includes the following:

The private sector accounted for all the new jobs in March, adding 230,000 positions after February's 240,000 increase. Government employment fell 14,000, declining for a fifth straight month as local governments let go 15,000 workers.

If public sector job loss remains at these levels, it may be that they will not threaten this very modest recovery.  But it seems more likely that the worst of the public layoffs are yet to come.  For example, this estimate from the Texas Legislative Budget Board for the next biennium anticipates budget-related job losses to be in excess of 271,000 jobs in the coming fiscal year, and over 335,000 lost jobs the year after that (Texas state budget is appropriated on a two year cycle).  Let's pause a moment to consider these figures.  If I'm reading the numbers right, we're talking about just over 600,000 jobs lost through public budget cuts in just one state over the next two years.  That's an averaged job loss of 25,000 per month for the next two years in Texas alone (the actual losses will of course not be so evenly distributed).  Of this total, it appears that over 340,000 public jobs would be lost directly from budget cuts, with the remaining 260K losses coming indirectly, as the impact ripples through the larger state economy.  For more on the Texas situation, here's one of several good articles from the Texas Tribune.

So looking forward, one question is whether the modest job growth occurring exclusively in the private sector right now can withstand what may be a pretty substantial wave of public layoffs at the state and local level.   Wonder how the above might impact the 2012 election cycle...

Unemployment: Don't Uncork the Champagne Just Yet

Unemployment, we're told, just dropped below the 9 percent rate for the first time since...forever.  I think the drop nationwide was one tenth of one percent.  Good news, for sure:

From BusinessWeek:

Factories added 33,000 jobs. Education and health care added 40,000 positions. Professional and businesses services added 47,000. Leisure and hospitality added 21,000 jobs. Construction companies, 33,000 jobs -- although a good chunk of those reflected people coming back on payrolls after January's harsh winter weather; Transportation and warehousing added 22,000 jobs.

But don't put your party hats on quite yet.  The actual unemployment rate, including those out of work for over six months or more, those who have given up hope, those who may have taken part-time work while trying to get back in the workforce--when one includes these workers--the true unemployment rate has been in the vicinity of 17%.

It's unclear to me what the trend will be going forward.  The private sector appears to be showing some willingness to hire, but we're also facing a wave of public-sector job losses in coming months--with states like Wisconsin and Ohio simply being the poster children.  The losses are going to be nationwide, and they will be painful.  As state and local governments finalize budgets and shed workers, the fallout may well swamp this very weak private-sector growth we're beginning to see.

To get a better view of what US unemployment actually looks like, the graph below (click on graph for full interactive view) tracks both the commonly used short-term unemployment figure (the 'rose-tinted glasses' view) vs. true, total unemployment/underemployment, from 1995 through 2010, including two officially-recognized recessions.  To repeat--I don't see anything worth celebrating here, expecially given what we're already seeing on the public employment front.