Labor Economist Says New Job Numbers Are Misleading
Employment figures in America rose for the fourth month in a row, with 120,000 jobs added in March, although those numbers are lower than the previous string of 200,000-plus monthly gains.
However, Antony Davies, a labor economist and associate professor of economics at Duquesne University, isn't too optimistic about the recent figures. He said in comparison to population growth, the net job growth for last month was really only 10,000 jobs.
"Now even then, 10,000 jobs sounds like a lot, but at that rate it's going to take 50 years to eliminate unemployment," Davies said. "To get unemployment back to where it was prior to the recession, we need 600,000 jobs a month for the next 12 months."
The national unemployment rate fell to 8.2%, its lowest since January 2009. However, the rate dropped because fewer people searched for jobs. The calculation only includes those seeking work. Davies said it's more realistic to put the unemployment rate closer to 11-12 percent. He said the media won't report on that reality because when it comes to unemployment, any news of job creation sounds like good news.
Although state and local jobs data come out separately from national statistics, Davies said the region has been largely immune from the fluctuation of the past decade.
"We didn't feel the euphoria as housing prices went up and as the bubble expanded but by the same token we didn't have the tremendous downturn when the bubble burst," Davies said. "So consequently our unemployment rate has stayed relatively stable."
In the Pittsburgh region, unemployment in February was 6.7 percent, and the rate has consistently been about 25 percent less than the nationwide rate for the last 10 years.
Many expect the state of the economy and labor market to be a major deciding factor in this fall's Presidential election, but Davies said government involvement can rarely improve the market.
"We can look at the Economic Freedom of North America Index. This looks at all 50 states and ranks them according to labor market freedom," Davies said. "What we see is that 25 states with the most labor market freedom have unemployment rates of about 8.1 percent versus 8.8 percent for the states with the worst labor market freedom."
He said hands off of business or deregulation aren't terms to be afraid of.
"Deregulation does not mean allowing business to run roughshod over everybody, what it means is not putting onerous burdens on business," Davies said. "In other words, regulations that have nothing to do with protecting consumers but rather have to do with entrenching businesses and keeping competition out."
A breakdown of the labor statistics shows industries that have been posting robust job gains slowed their hiring somewhat in March. Professional and business services added 31,000 jobs; education and health added 37,000; and leisure and hospitality, 39,000. Manufacturing continued a healthy recovery, adding 37,000 jobs, but the construction industry cut 7,000 and retailers chopped 34,000 jobs.