Job market may be worse than it looks
Posted: Sat Jun 19, 2004 5:28 pm
Worse than it looks
By ROMA LUCIW
Globe and Mail Update
POSTED AT 2:11 PM EDT Thursday, Jun 17, 2004
Just when it appears the embattled U.S. job market has turned a corner, a new report says the biggest reason is not a booming economy but rather that a growing number of discouraged job-seekers have given up looking.
If all of the people who have dropped out of the job hunt were to resume searching, the jobless rate would jump to 8 per cent, according to executive-outplacement company Challenger, Gray & Christmas Inc. In May, the U.S. jobless rate was 5.6 per cent, unchanged from the previous month, as a growing number of Americans entered the labour market looking for work.
“If just a fraction of the 21.3 million Americans currently sitting on the labour-force sidelines decided to reenter the job market — which they could do at any moment — the employment numbers would change dramatically,” said John Challenger, chief executive of the Chicago-based company.
The report is troubling because it sheds doubt on the health of the U.S. job market, which until recently was the missing link in the country's economic recovery.
Until early 2004, the country had experienced what some economists have called a “jobless recovery,” with hiring lagging all other economic indicators even as corporate profits rebounded. (Since January 2001, the U.S. has lost 1.8 million jobs.)
That changed early this year, when the job market began to perk up. In May, the U.S. economy created 248,000 new jobs. Since January, 1.2 million jobs have appeared.
Data released by the U.S. Labour Department Thursday continued to paint an upbeat picture, saying first-time weekly claims for state unemployment benefits fell to their lowest level in a month, although economists said the slide was in part due to the closing of state offices last Friday for the funeral of former president Ronald Reagan.
The four-week average of initial claims also fell by 2,750 to 343,250, a sign that the U.S. job market continues to accelerate.
According to the Challenger report, however, unpublished data from the Bureau of Labour Statistics show that in May there were 21.3 million 25-to-54-year-olds not working or looking for work. None of these 21.3 million people was counted in the May monthly unemployment figures, regardless of whether they wanted a job, because the government's monthly data don't include people who have not been actively searching for work in four weeks.
Even if only 15 per cent of those 21.3 million unemployed people were to begin job hunting, the unemployment rate would pop up to 7.6 per cent, the Challenger report said.
“Imagine the impact nationwide if the unemployment rate suddenly shot up to 7.6 per cent,” said Challenger.
The company said the most revealing trend is that the number of not-working people who don't want a job has grown by 256,000 since January, when the figure stood at 18.9 million. “That growth rate is more than double the increase in the civilian labour force, which rose by just 111,000 from 146.863 million in January to 146.974 million in May,” it said.
Of those 21.3 million unemployed 25- to 54-year-olds in May, just 2.2 million said they want a job, Challenger said, leaving 19.1 million who presumably do not.
Reasons that the 2.2 million wanting a job didn't look varied from discouragement to family responsibilities such as a lack of child care or transportation. The remaining or 19.1 million not looking for work included stay-at-home parents, people on disability, students and early retirees, the report said, citing Bureau of Labour spokesperson.
“Whatever the reason for nonparticipation in the job market, the fact is that any of the nearly 22 million, but particularly those who want a job, could decide at any moment to re-enter the fray. The catalyst may turn out to be the 1.2 million new jobs created by employers since January,” Challenger said.
Government research shows that more and more people are looking for work. In May, the number of people who started to look for jobs shot up by 5.3 per cent from April to 2,438,000 million, the report said.
By ROMA LUCIW
Globe and Mail Update
POSTED AT 2:11 PM EDT Thursday, Jun 17, 2004
Just when it appears the embattled U.S. job market has turned a corner, a new report says the biggest reason is not a booming economy but rather that a growing number of discouraged job-seekers have given up looking.
If all of the people who have dropped out of the job hunt were to resume searching, the jobless rate would jump to 8 per cent, according to executive-outplacement company Challenger, Gray & Christmas Inc. In May, the U.S. jobless rate was 5.6 per cent, unchanged from the previous month, as a growing number of Americans entered the labour market looking for work.
“If just a fraction of the 21.3 million Americans currently sitting on the labour-force sidelines decided to reenter the job market — which they could do at any moment — the employment numbers would change dramatically,” said John Challenger, chief executive of the Chicago-based company.
The report is troubling because it sheds doubt on the health of the U.S. job market, which until recently was the missing link in the country's economic recovery.
Until early 2004, the country had experienced what some economists have called a “jobless recovery,” with hiring lagging all other economic indicators even as corporate profits rebounded. (Since January 2001, the U.S. has lost 1.8 million jobs.)
That changed early this year, when the job market began to perk up. In May, the U.S. economy created 248,000 new jobs. Since January, 1.2 million jobs have appeared.
Data released by the U.S. Labour Department Thursday continued to paint an upbeat picture, saying first-time weekly claims for state unemployment benefits fell to their lowest level in a month, although economists said the slide was in part due to the closing of state offices last Friday for the funeral of former president Ronald Reagan.
The four-week average of initial claims also fell by 2,750 to 343,250, a sign that the U.S. job market continues to accelerate.
According to the Challenger report, however, unpublished data from the Bureau of Labour Statistics show that in May there were 21.3 million 25-to-54-year-olds not working or looking for work. None of these 21.3 million people was counted in the May monthly unemployment figures, regardless of whether they wanted a job, because the government's monthly data don't include people who have not been actively searching for work in four weeks.
Even if only 15 per cent of those 21.3 million unemployed people were to begin job hunting, the unemployment rate would pop up to 7.6 per cent, the Challenger report said.
“Imagine the impact nationwide if the unemployment rate suddenly shot up to 7.6 per cent,” said Challenger.
The company said the most revealing trend is that the number of not-working people who don't want a job has grown by 256,000 since January, when the figure stood at 18.9 million. “That growth rate is more than double the increase in the civilian labour force, which rose by just 111,000 from 146.863 million in January to 146.974 million in May,” it said.
Of those 21.3 million unemployed 25- to 54-year-olds in May, just 2.2 million said they want a job, Challenger said, leaving 19.1 million who presumably do not.
Reasons that the 2.2 million wanting a job didn't look varied from discouragement to family responsibilities such as a lack of child care or transportation. The remaining or 19.1 million not looking for work included stay-at-home parents, people on disability, students and early retirees, the report said, citing Bureau of Labour spokesperson.
“Whatever the reason for nonparticipation in the job market, the fact is that any of the nearly 22 million, but particularly those who want a job, could decide at any moment to re-enter the fray. The catalyst may turn out to be the 1.2 million new jobs created by employers since January,” Challenger said.
Government research shows that more and more people are looking for work. In May, the number of people who started to look for jobs shot up by 5.3 per cent from April to 2,438,000 million, the report said.