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March Job Growth Disappoints

"The standard story is that some combination of outsourcing and technical changes are allowing the economy to grow without jobs, but this has been going on for a long time," Levy said. "That story is starting to wear thin."

Gary Burtless, a labor economist at the Brookings Institution, noted that since the last economic peak in 2000, a striking demographic shift in the labor market has occurred. There has been a 3.4-percentage-point increase in the number of 55-to-64-year-olds holding jobs, but a 2-percentage-point decline in the work-force participation of 25-to-34-year-olds. Younger workers, aged 20-34, have left the labor market in droves, Burtless said.


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Bureau of Labor Statistics: March 2005 Employment Situation Report




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The post-World War II economy has never seen declines like that among younger workers, he said. Unless the university system is undergoing a remarkable and unnoticed expansion in graduate school programs, it bodes poorly for their future earning power and economic vitality.

"I hope that these young people are doing something to get better credentials, because if they're not, we have a real historical change here," Burtless said.

The March numbers painted a mixed picture of the economy. In its survey of households, the Labor Department found a 7.7 million-person decrease in the ranks of the unemployed, as well as an improvement in the percentage of long-term unemployed. But there remains 1.6 million people who say they want a job but cannot find one, about the same number as a year ago. Those people are not counted as unemployed because they did not actively search for work in the four weeks preceding the survey.

In its survey of employer payrolls, the Labor Department found job growth in construction, mining, health care, professional and business services and wholesale trade. Construction employment rose by 26,000 in March, nearly a quarter of the nation's new jobs. Professional and business-service jobs surged by 27,000.

Total payrolls have now climbed by 2.1 million jobs during the past 12 months and 3.1 million since they bottomed out in May 2003.

But manufacturing employment slumped by 8,000 jobs in March, and is down by 24,000 in the first three months of 2005, compared to the final quarter of 2004. About 7,000 jobs were lost in March in the textile and apparel industries, job losses the industry quickly blamed on a surge of imports from China that followed this year's phase-out of global textile quotas.

Average weekly earnings nudged up $1.35 for the month -- or 0.3 percent. For the first quarter of the year, earnings are up just 0.5 percent, not enough to keep up with inflation, Burtless noted.

"It's fair to say the improvement in the labor market is still relatively modest compared to past expansions at this point," Dudley said. "Hiring had started to pick up for awhile, but people are surprised that there has not much follow through."


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