The U.S. job market is gaining steam. The economy added a net gain of 236,000 jobs last month, beating expectations and driving the unemployment rate down to 7.7%, the lowest since 2008. That’s good news on the surface. Since the recession, the U.S. added 4.5 million jobs. And in February alone, the construction industry added 48,000 jobs, a gain we haven’t seen in nearly six years. That brings the sector’s total gain of new construction jobs to 151,000 since September.
But as Jared Bernstein, who served as chief economist and economic policy adviser to Vice President Biden, points out, “these monthly reports are never an analytical slam-dunk.”
While paychecks in the private sector jumped 0.6%, for many workers that additional take-home pay is offset by higher gas prices and the restoration of the 6.2% payroll tax employees pay.
The number of Americans who are long-term unemployed, meaning they have been searching for a job since at least September, ticked up to nearly 40% of total unemployment. Their job hunt could soon get even harder as the $85 billion in sequester cuts start to kick in. Bloomberg economists predict these cuts will eliminate another 350,000 jobs by December.
But there is hope the private sector could help offset some of the losses. Private payrolls are up 246,000 in February while federal, state and local governments cut 10,000.
Another reason to be cautious about the 7.7% rate is that 295,000 additional adults chose not to look for work last month, artificially driving the number down. The participation rate fell to 63.5% matching its lowest since september 1981 as more and more workers give up hope of finding a job. And as Peter Morici, former chief economist at the U.S. International Trade Commission explains, unemployment would be 10.9% if the participation rate was the same as when President Obama took office.
Both Peter Morici and Jared Bernstein join the show today at 3pm to dig inside the numbers.