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U.S. gains more jobs in April, but unemployment rises

The unexpected increase in the jobless rate offers a reminder of how deep the roots of America's jobs problem go.

May 06, 2011|By Don Lee, Los Angeles Times
  • A job seeker shakes hands with a recruiter at a management and sales job fair in San Diego. Professional and technical businesses posted healthy job gains in April.
A job seeker shakes hands with a recruiter at a management and sales job fair… (David Maung, Bloomberg )

Reporting from Washington — Despite sharply weaker economic growth in the first quarter, the nation created almost a quarter-million new jobs in April, notched its third straight month of solid payroll gains and eased fears that higher oil prices might undercut the fragile recovery.

But an unexpected uptick in the unemployment rate — to 9% last month from 8.8% in March — offered a harsh reminder of how deep the roots of America's jobs problem go and how great the challenges remain.

The country gained 244,000 net jobs last month but still needs about 7 million additional jobs just to return to pre-recession levels.

And a significant part of the stubbornly high unemployment may be structural: Millions of potential workers may have only the dimmest prospects for finding work even if the recovery continues — owing largely to their levels of skill and education.

The record growth of the long-term unemployed in the last few years represents a major, though seldom discussed, challenge to reining in the federal deficit and bringing government spending under control.

Friday's report by the Labor Department showed 13.8 million workers as jobless in April, of whom about 43%, or nearly 6 million, have been unemployed for more than six months.

"They're willing workers, but they're not in the right locale or have the right education or career training that qualifies them for the jobs opening up," said Patrick O'Keefe, economic research director at the financial advisory firm J.H. Cohn.

Back in the early 1980s when O'Keefe was a Labor Department official, the nation also experienced double-digit unemployment, but the share of long-term unemployed never went above 26%.

One key difference this time, O'Keefe said, is the much larger number of layoffs of prime-aged workers in jobs that aren't likely to come back any time soon, such as construction and housing-related industries.

"There is this new challenge particularly of middle-aged male workers who presumed they were qualified for the jobs that existed," O'Keefe said. "And in today's knowledge-based economy, that's not the case."

Even before the latest recession, the United States had a smaller share of its working-age male population employed or looking for work than many of its competitors in the developed world.

The recession has made the problem worse. Today just 67% of men 20 years and older in the U.S. are employed, compared with 73% in 2007, before the downturn, and 85% in the 1950s.

The consequences of this shift are significant for many families and for the nation as a whole. The long-term unemployed contribute little to government tax revenues, even as they consume more publicly financed services such as unemployment and disability insurance and subsidized healthcare.

The number of unemployed, including the long-term jobless, has dropped in the last year as the economy has begun to create jobs again. Since February of last year, employers in the U.S. have added 1.8 million to their payrolls, including an average monthly gain of 233,000 in the last three months.

The Labor Department's report Friday suggested that more workers reentered the job market in April, which helped push up the unemployment figure because people are counted as jobless only if they are actively looking for work.

What's unclear is whether the recent momentum in hiring can be sustained. And if so, can the U.S. ever again have an unemployment rate around 5%, as it did before the recession?

"We don't believe the potential of the American economy has been permanently damaged because of this recession," said Austan Goolsbee, chairman of the Council of Economic Advisers at the White House.

By his council's latest forecast, Goolsbee sees the jobless rate returning to 5.3%, albeit gradually, at a pace of 1 percentage point a year.

In an interview Friday, Goolsbee noted that the April employment gains marked the biggest private-sector job growth in five years. "That's not a one-time shot, it's a continuation of a trend," he said.

Retail employment led the way in April, adding 57,100 jobs. Healthcare and leisure businesses also beefed up payrolls.

A Norwalk woman and her daughter who had been living in their car for a time were thrilled to be hired by McDonald's during its daylong hiring blitz recently, said Mark Loranger, president of Chrysalis, which helps the hard-core unemployed find work.

"Now they are going to begin today at McDonald's in Santa Monica for a combined $16 an hour," he said Thursday.

On the higher side of the pay scale, manufacturers continued to bulk up as exports have grown, adding 29,000 employees to their domestic workforce. And in an encouraging sign that the long-stalled service sector may be picking up, professional and technical businesses, such as computer systems design, management consulting and engineering services, posted healthy gains last month.

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