Job growth slows in Washington region
Wednesday, July 21, 2010
Unemployment rates in the District, Maryland and Virginia had their third consecutive simultaneous declines in June, according to government data released Tuesday. But while the previous decreases illustrated rapid job gains, experts say, the June data reflect renewed pessimism about the economy as employers put the brakes on hiring and unemployed people stopped looking for work.
The District's unemployment rate fell to 10 percent in June, down from 10.4 percent in May, according to the U.S. Bureau of Labor Statistics. Maryland's jobless rate dropped to 7.1 percent from 7.3 percent, and Virginia's slipped to 7.0 percent from 7.1 percent. In comparison, the U.S. unemployment rate in June was 9.5 percent, down 0.2 percentage points from May.
The rates for all three jurisdictions are the lowest they've been in about a year.
Job growth was much slower in June, said Anirban Basu, chairman and chief executive of Sage Policy Group, a Baltimore economic and policy consulting firm. Moreover, he said, the labor force decreased by 9,500 in Maryland, 8,400 in Virginia and 1,000 in the District, suggesting that many unemployed people became discouraged with the job market and halted their search for work.
"What has taken place since late April has been a reversal of the optimism that had been emerging earlier in the year," Basu said, adding that employers are reacting to the sharp drops in the stock market, the debt crisis in Europe, the oil spill in the Gulf of Mexico and decreases in consumer spending.
"These factors conspired to diminish [the confidence of] small business nationally and in the region, and, as result, their appetite to take on additional workers has been reduced," he said. "Not only are we not observing more people at work, but we are observing more people giving up the effort to get to work."
Sara Kline, associate economist at Moody's Analytics, said the momentum of the region's recovery has slowed.
Kline said the slowdown in the three jurisdictions is attributed more to skittishness in the private sector than to a pullback in hiring of census workers. Earlier this year, the region's rate of private-sector hiring outpaced the national rate. But now, she said, businesses in the region are reflecting the uneasiness felt by their counterparts around the country.
"I don't expect [private sector hiring] to take off until later in the year or early next year because of global concern," she said. "Confidence is not back to full strength."
The District had a net gain of 3,700 jobs, with employment growing mainly in the professional and business services, government and leisure and hospitality sectors. "The District folks who lost jobs at the beginning of the recession -- we're seeing those jobs being added back in significant numbers for the first time," said Joseph P. Walsh Jr., director of the District's Department of Employment Services.
Eric M. Seleznow, executive director of Maryland Governor's Workforce Investment Board, said 1,600 more people in the state were working in June than in May. The construction and leisure and hospitality sectors had a net gain in jobs, while health and education lost them.
"The workforce system has used every tool in the toolbox to address" long-term unemployment, Seleznow said. "It's discouraging. It's hard to search for a job in the long-term. For people to drop out is understandable."
The Labor Department adjusted Maryland's May unemployment rate upward to 7.3 percent from its initial estimate of 7.2 percent released last month.
Virginia's employment grew by a not-seasonally adjusted 22,600 jobs, said Ann D. Lang, senior economist at the state's Employment Commission. The state experienced net gains in leisure and hospitality, retail and education and health, but net losses in government and information.
Nationally, unemployment rates fell in 39 states and the District.
Nevada had the highest unemployment rate at 14.2 percent. North Dakota was the lowest, at 3.6 percent.