US Jobs Hit By Big Chill–IT Workers Relatively Warm
January 13, 2014 Timothy Prickett Morgan
Blame the bad weather that blanketed much of the country in December. Last Friday, the Labor Department reported that the U.S. economy only added 74,000 net new jobs, which is a lot less workers than is needed to be hired for the unemployment rate to come down and, more importantly, is needed to get people who have long since stopped working getting a paycheck again.
According to the latest report from the Bureau of Labor Statistics, the number of people who were unemployed in the United States went down by 490,000 to 10.4 million in December, which should be good news and which helped drive down the unemployment rate to 6.7 percent. However, the reason that the unemployment rate is falling is not so much because people have found jobs but because many have stopped looking. And by the definitions of the Department of Labor, if you are not looking for a job, you are not unemployed. You are some other third category.
That the unemployment rate has fallen by three-tenths of a percent to 6.7 percent is important because the Federal Reserve under former chairman Ben Bernanke has said that it would start tapering off its quantitative easing–pumping tens of billions of dollars a month into the economy–once the rate came down to 6.5 percent. Janet Yellin has just been confirmed as the new chief of the Fed, and now she will have an interesting decision to make. Does she look at the interest rate, job creation, or both to make a call on when to ease back on the money pump?
In an interesting post in the Wall Street Journal, a graphic showed employment at the January 2008 peak before the Great Recession began, and at the time there were over 138 million people employed in the United States. The economy quickly shed nearly 9 million jobs and has just climbed back up to 136.9 million employed. That’s not so bad, right? Wrong. We are actually down nearly 8 million jobs still because we need to add on the order of 200,000 net new jobs each month just to keep up with population growth. At this rate, we will never fill in that jobs gap. But the stock market is at an all-time high, it looks like U.S. gross domestic product is rebounding a bit, and the rich have never been richer. So maybe there is some hope?
The household survey had a total of 273,000 people who did not report to work in December because of the weather, almost 100,000 more than normal. Some industries, such as construction, have to lay off workers when the weather is bad. Construction companies cut 16,000 workers and local, state, and Federal governments cut another 13,000 people. However, retailers added 55,000 people, wholesalers added another 15,000, manufacturers added 9,000, and professional services added 19,000. Somewhat surprisingly, healthcare companies shed 6,000 workers.
The Department of Labor does not count jobs by title each month, but by industry. This is not as useful as it would be if both kinds of data were collected. What this means is we cannot get a good idea of the employment situation in the IT sector. Instead, we have to use the IT vendors as a sort of proxy.
To that end, if you look at the companies that make computer and electronic products, employment was down by 2,400 to 1.08 million. That is noise in the data, unless you are one of the many who got a pink slip. Computer and peripheral makers employed 165,000 workers, an increase of 300 using the seasonally adjusted data from the BLS. Communications equipment makers employed 104,000 workers in December, down a mere 100 from levels in November. Employment at semiconductor and electronic component makers rose by 1,400, to 381,000, last month.
Within the information sector, which includes all kinds of publishing and broadcasting, companies engaged in data processing and hosting services employed 186,400 people, down 400. Telecom companies added 1,700 workers, for a total of 860,400. Companies in the computer systems and design business added 1,400 workers, for a pool of 1.71 million employees, and those in management and technical consulting added 3,900, for a total of 1.2 million workers.