Uncertain and uneven–that’s how today’s job market looks.
Though employers added 144,000 jobs in August, the labor force shrank by 152,000 people–offsetting the good news, according to the U.S. Labor Department’s household survey.
Though the unemployment rate dipped to 5.4 percent from 5.5 percent in July, companies are still hesitant to bulk up payrolls as aggressively as they have in some previous economic recoveries.
Long-term unemployment is a growing problem, according to a report issued Saturday by the Economic Policy Institute in Washington, a liberal-leaning think tank. More than one-fifth of today’s jobless have been out of work for 27 weeks or longer.
Firms are holding back for several reasons–an uncertain outlook, slack consumer spending, foreign competition, and the cost of providing health and other benefits, said Nigel Gault, economist at Global Insight, a consulting firm.
The unemployment rate remains relatively low by historical standards, but economists said there is more hidden joblessness than in the past. More workers have dropped out of the workforce, waiting until things improve, than in previous recoveries, Gault said.
Locally, worker confidence is among the worst in the nation, according to the findings of the Hudson Employment Index. Negative reports about industries such as manufacturing and hospitality, as well as the bankruptcies of major corporations such as United Airlines, have jaded people’s outlooks, said Kevin Knaul, executive vice president of Hudson, an information technology and telecommunications firm. .
“You don’t have to be working in fields directly related to these organizations to have negative feelings impressed about the overall employment market,” Knaul said.
Wachovia Bank Economist John Silvia said the real slack in the jobs market is in low-skilled occupations held by those with less education. But the problems of the nation’s low-income population cannot be solved by cutting taxes or interest rates, he said, adding that neither presidential candidate is dealing effectively with this issue.
Silvia said one solution would be to give people tax incentives to move away from areas with few employment prospects.
Tim Kane, economist at the Heritage Foundation, a conservative think tank, said real, inflation-adjusted earnings are up 2 percent over three years ago.
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Jerry Jasinowski, president of the National Association of Manufacturers, said the cost of health benefits is a large impediment to factory job creation, along with litigation, energy prices and regulations. The “cost of labor” is 22 percent higher in the U.S. than among its nine major trading partners, he said.
In its Labor Day report, the association said manufacturers likely would add 350,000 jobs over the next year, in sharp contrast to job losses the manufacturing sector has suffered in the past few years.