How Bad is It? The Employment Outlook for 2012 and Beyond

By Joseph Allen Kelly

In a sign of the times, Hallmark, the card maker known for having a card or sentiment for virtually any situation or occasion has launched a line of job loss cards. With lines like: "Don't think of it as losing your job, think of it as a time-out between stupid bosses," and another featuring a cat that reads "Is there anywhere I could hack up a hairball, like say, on a former employers head?", Hallmark has tapped into the zeitgeist of our current uncertain and changing age. It seems everyone knows someone who has lost a job and is having trouble finding work. Many folks find themselves plunging from middle class security to relying on food stamps in the span of a few months. But beyond these anecdotal indicators, what do employment and hiring statistics tell us about where we are, and more importantly, where we are headed in the job market?

I.  Brief Overview

Under normal conditions, the U.S. economy needs to generate about 125,000 new jobs each month to absorb new entrants into the job market and thus keep the unemployment rate steady. As we all know that has not been happening over the last few years. For example, 150,000 layoffs where announced nationwide in September. As a result, overall unemployment in the United States has remained stuck in the low 9 percent range for much of 2011. There are pockets of higher unemployment, with some areas well above 20 percent. Tennessee basically mirrors the same pattern, with the only difference being that the overall average has hovered in the high 9 percent range. Again, some counties in the state have unemployment rates in excess of 25 percent.

II. The Employment Situation in Detail -- September 2011

Nonfarm payroll employment edged up by 103,000 in September, and the unemployment rate held at 9.1 percent, the U.S. Bureau of Labor Statistics reported. The increase in employment partially reflected the return to payrolls of about 45,000 telecommunications workers who had been on strike in August. In September, job gains occurred in professional and business services, health care, and construction.
Government employment continued to trend down.

The number of unemployed persons, at 14 million, was essentially unchanged in September. Among the major worker groups, the unemployment rates for adult men (8.8 percent), adult women (8.1 percent), teenagers (24.6 percent), whites (8.0 percent), blacks (16.0 percent), and Hispanics (11.3 percent) showed little or no change in September. The jobless rate for Asians was 7.8 percent, not seasonally adjusted.  The number of long-term unemployed (those jobless for 27 weeks and over) was 6.2 million in September. These individuals accounted for 44.6 percent of the unemployed.

Both the labor force and employment increased in September. However, the civilian labor force participation rate, at 64.2 percent, and the employment-population ratio, at 58.3 percent, were little changed.
The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) rose to 9.3 million in September. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

In September, about 2.5 million persons were marginally attached to the labor force, about the same as a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available to work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the four weeks preceding the survey.

Among the marginally attached, there were 1 million discouraged workers in September, down by 172,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million persons marginally attached to the labor force in September had not searched for work in the four weeks preceding the survey for reasons such as school attendance or family responsibilities.

As previously stated, total nonfarm payroll employment edged up by 103,000 in September. Since April, payroll employment has increased by an average of 72,000 per month, compared with an average of 161,000 for the prior seven months. In September, job gains occurred in professional and business services, health care, and construction. Government employment continued to trend down.

Employment in professional and business services increased by 48,000 over the month of September and has grown by 897,000 since a recent low in September 2009. Employment in temporary help services edged up in September; this industry has added 53,000 jobs over the past three months. In September, employment growth continued in computer systems design and in management and technical consulting services.

Health care employment continued to expand in September, with an increase of 44,000. Within the industry, job gains occurred in ambulatory health care services (+26,000) and in hospitals (+13,000).

Construction employment increased by 26,000 over the month of September, after showing little movement since February. The over-the-month gain was due to employment increases in the nonresidential construction industries, which includes heavy and civil construction.

Mining employment continued to trend up in September. Employment in information was up by 34,000 over the month of September due to the return of about 45,000 telecommunications workers to payrolls after an August strike.

Manufacturing employment changed little in September (-13,000) and has been essentially flat for the past two months.

Within retail trade, employment declined in electronics and appliance stores (-9,000) in September. Employment in wholesale trade, transportation and warehousing, financial activities, and leisure and hospitality changed little.

Government employment continued to trend down over the month of September (-34,000). The U.S. Postal Service continued to lose jobs (-5,000). Local government employment declined by 35,000 and has fallen by 535,000 since September 2008.

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour over the month of September to 34.3 hours following a decrease of 0.1 hour in August. The manufacturing workweek edged down by 0.1 hour in September to 40.2 hours. Factory overtime increased by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.6 hours in September.¹

III.  SILVER LINING OF HIGHER WAGES IN SOME SECTORS

Despite the continued soft employment numbers, there is some recent positive news for those who have jobs. In September, average hourly earnings for all employees on private nonfarm payrolls increased by four cents, or 0.2 percent, to $23.12. This increase followed a decline of four cents in August. Over the past 12 months, average hourly earnings have increased by 1.9 percent. In September, average hourly earnings of private-sector production and nonsupervisory employees increased by three cents, or 0.2 percent, to $19.52.²

Additionally, according to a recent survey by the National Association of Colleges and Employers, those Class of 2011 graduates lucky enough to land jobs got a second bonus: higher salaries. The average salary offer for the most recent crop of graduates was up six percent compared to salaries offered to 2010 graduates. For those earning bachelor's degrees, salary offers rose to $51,171 from $48,288 in 2010. Salary increases were widespread, but varied based on the field a study.

Here's a look at some of the salary breakouts by field:

Business: Up 4.6% to $48,805
Business administration/management: Up 5.4% to $46,372
Economics: Up 3.9% to $53,690
Finance: Up 4.8% to $51,503
Computer-related: Up 9.6% to $63,760
Computer science: Up 9.3% to $66,084
Information sciences and systems: Up 5.9% to $55,619
Engineering: Up 2.8% to $60,291
Petroleum engineering (the highest-paid major in 2011): Up 7.1% to $82,740
Chemical engineering: Up 1.8% to $66,058
Computer engineering: Up 4.1% to $62,849

IV. OUTLOOK FOR 2012 AND BEYOND

All economic indicators point to continued softness in the job market through 2012. It is likely that the unemployment rate will continue to hover in the nine percent range nationally. Many economists predict that employment growth will continue to lag for the next decade. This does not seem like an unreasonable projection given continued problems in the finance and construction industries. In short, when a bubble bursts, it can take a continued toll on employment for years.

Most projections show that over the next decade, job growth will be centered in the health and service related occupations with more than 50 percent of new jobs during this period falling in these areas. Additionally, occupations in which a college degree is usually required are expected to account for one-third of total job openings during this period. Growth will likely not reach the rates of the boom times in the 1990s, but will likely exceed the low growth of the early 2000s.

While health care will be a big driver of employment growth in the next decade (including home health care and services for the elderly and nursing homes), other industries will continue to lag. The largest declines are expected in retail department stores followed by manufacturing, including semiconductors and motor vehicle parts. In short, as has historically been the case, job growth will be uneven across sectors and there will be definite winners and losers in the job market based on skill set.³

^{1 Taken from the Bureau of Labor Statistics, Employment Situation Summary. http://www.bls.gov/news.release/empsit.nr0.htm
2 Id.
3 Savings to Invest.  Best Job Prospects, Occupations and Professions in the Next Decade - 2010, 2011, 2012 to 2018. (n.d.). Retrieved November 8, 2011 from http://www.savingtoinvest.com/2009/12/best-job-prospects-and-employment.html}