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March Saw Strong Job Growth, Lingering Long-Term Unemployment

David Godow
April 1, 2011, 3:30pm

Today's employment numbers from the Bureau of Labor Statistics continues the trend of "good, but not great" reports we've had for a good 4-6 months now. The economy added 216,000 jobs in March and the unemployment rate fell to 8.8%. Labor force participation held steady for the second straight month, suggesting the exodus of workers from the job market might be about over. Overall, job growth was driven by less educated Americans; the unemployment rate fell slightly for those with less than a high school degree or some college, but actually rose for those with a bachelors' or better.

Some troubling factors remain. One is the stubborn inability of the job market to clear long-term unemployed folks out of the system. The average number of weeks spent unemployed is at an all-time high of 39.0 and hasn't given any sign of slowing, as the chart below shows. This number is being driven by the consistently high level of people unemployed for more than 27 weeks, even as the number of unemployed at every other time period has been falling/

A separate but related issue: the elevated level of discouraged workers, or people who have stopped looking for a job (and thus are not technically "unemployed") because they believe none are available. Clearly, the economy is leaving behind a significant amount of labor and the longer these people remain unemployed, the harder it will be to sift them back into the workforce.

I haven't been able to find an updated version of this post from CalculatedRisk last summer, which showed that the longest-term unemployed are also usually highly educated. This squares with what we're seeing in the education-decomposed unemployment rate right now, which, as I noted above, is rising for people with a bachelors degree or higher. This makes some intuitive sense: the more educated one is, the more specialized her skills and the greater her unwillingness to take a menial, low-paying job.

Clearly, it's not just the college-educated who have trouble finding a job. But it might be that segment of the population -- ostensibly the most recession-resistant -- that are holding up the recovery of the labor market.


David Godow is Research Assistant


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