Coming off the heels of a busy holiday season that saw a gain of 200,000 U.S. workers in December, economists estimate a sluggish January 2012 job market, with only over 100,000 jobs added and an unemployment rate inching up a tenth of a percent from last month to 8.6.
As the gift-giving period ended, as many as 40,000 couriers and messengers hired late last year were most likely left without work by January, slicing 20 percent from the December figure, according to Heidi Shierholz, an economist at the Economic Policy Institute in Washington D.C. Additionally, the construction sector also slowed down due to the weather and the already weak building activity across the country.
“I think we’re probably going to get somewhere in the range of 100,000 to 120, 000 jobs,” Shierholz said referring to the job increase.
While the health sector is expected to see some growth, along with trading and manufacturing, they will be offset by the losses of jobs in state and local governments, she added.
“We’re adding enough jobs to keep things from getting worse,” said Shierholz. “But we are not adding enough to start digging our way out of the hole we are in.”
The “hole” Shierholz refers to is the remaining labor market gap of over 10 million jobs, which was lost during the recession. Just to hold the unemployment rate steady, the U.S. economy needs 90,000 jobs a month.
But even using the December hiring rate of 200,000 as a reference point, it will take until 2019 to return to the pre-recession level. To get back to full employment in four years, the economy needs to add 320,000 jobs a month.
As it is now, the “minimal growth” in the labor force, which is “a sign of little confidence in the health of the job market,” is worth noting, said economist Ryan Sweet of Moody’s Analytics.
“Typically we wanted to see stronger labor force growth as the recovery matures,” Sweet said, offering similar observation as Shierholz.
Sweet is even more conservative in his January 2012 estimates, predicting a non-farm payroll of 100,000.
“The labor market is improving but at a glacial pace,” Sweet said. Temporary factories hiring in December were unwind their work in January, so a weaker employment in inevitable, he said.
One solution Sweet proposed is the extension of the payroll tax holiday until the end of 2012. The current payroll tax holiday is set to expire in February and the debate over the issue is creating too much uncertainty among business owners, he said.
“If they don’t extend the payroll tax holiday, I think it will be potentially too much for the economy to adjust and that it would increase the odds of another recession,” Sweet said.
Sweet also warned that the ongoing European crisis could also drag down the U.S. economy and stall the recovery. “Europe is already in recession and that’s going to reduce U.S. exports, which will hurt hiring,” he said.
Sweet predicted the U.S. Federal Reserve will remain aggressive in the event of a job market slowdown. Should that slowdown happen, he said, the Fed will implement a third round of quantitative easing, by printing more money to circulate in the economy.
In Washington D.C., Shierholz is calling for a “substantial” stimulus package to generate more jobs and bring the unemployment down, saying it is the right fiscal policy.
“The first one was too small and tt stopped too early,” Shierholz said. “We should be doing substantial additional stimulus. The economy can totally handle it. In fact, it’s exactly what the economics calls for.”
In batting for more stimulus money, Shierholz said, at this time, the budget deficit should be less of a worry than return to recession. Still, Shierholz conceded Washington is in no mood for such a proposal because of the political fight between Democrats and Republicans.
“They’re settling for years of extremely elevated unemployment, needlessly condemning millions of families to unemployment,” she said. It doesn’t have to be this way, but it’s what we’re making.”
Far from the corridors of power, Yolanda Regis, a 42-year-old resident of the Bronx, awaits her return to the job market. She lost her job as a manager at a laundry shop, but did not want to remain unproductive. On January 31, Regis will finish a four-month green jobs training program organized by the Sustainable South Bronx.
Regis is applying for a job installing new energy-efficient appliances and weatherizing windows for the winter season.
Despite the odds, she said, she is hopeful to find a job. “I’m very flexible and I am strong,” said Regis. “If I put my mind to it I can do it.“
(This article was also published in People’s Daily Online and Shanghai Daily)