U.S. Job Growth Sputters In January, And So Does IT Employment

February 10, 2014 Timothy Prickett Morgan

December was cold, and so was January. And the economy in the United States is feeling the chill if the job market is any indicator. For the second month in a row, American employers in the private sector added fewer jobs than expected and the masters of the public sector across local, state, and Federal agencies took out the pink slips and handed them around.

The Department of Labor issues its monthly jobs report, which you can see here, on the first Friday of every month and the global economy reacts instantly to what numbers come out. As I have pointed out time and again, America needs to add somewhere between 200,000 and 250,000 jobs just to keep up with population growth and has to add many, many millions more on top of that to give a job to everyone who was knocked out of work during the Great Recession. It is a tall order, and the official unemployment rate does not even come close to reflecting the real situation out there in the job market.

Excepting years when there is an official national census, January is always a tough month for jobs growth. Construction is usually curtailed in the colder parts of the country and retailers let go of workers they hired during the holiday shopping spree. In this case, construction companies actually added 48,000 net new jobs in January, bucking the trend, and accounting for almost half of the 113,000 new jobs the entire economy added last month. Manufacturers added 21,000 new people to the payrolls as a group, and wholesale distributors added another 14,000. The mining industry employed 7,000 more people as January came to an end than they had as the month started. The professional and business services sector added 36,000 and the leisure industry added 24,000. Retailers slashed 13,000 people and healthcare was flat; the US government slashed 12,000 workers, with 9,000 of them coming from the US Postal Service. Across the private sector, 142,000 jobs were created, but governments cut 29,000 workers.

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.

According to the household survey, which the Bureau of Labor Statistics does to get a sense of how many people are unemployed and others who have stopped looking and therefore are not counted in the unemployment statistics, the official unemployment rate was down one-tenth of a point to 6.6 percent. As we all know, this is a feel-good statistic, made to help Wall Street and the rest of us I guess feel good about what we all know damned well is a much worse situation. And yes, in case you were wondering, I am giving a serious thought to running for Vice President in 2020. (I will need a job, and frankly, Number One Observatory Circle is pretty sweet and you get to run the Senate. Sorta. My wife is not all that keen on being called Second Lady, though.)

The official number of people who are unemployed–meaning that they are looking for work but cannot find it–is 10.2 million people out of a pool of 246.9 million people who are of working age. The number of people who have dropped out of the labor market and are therefore not part of the unemployment statistics is about the same scope as the number of unemployed–the BLS doesn’t track this well, and that is on purpose, too.

What all of the economists are puzzling over is the acceleration of the economy in the United States as the year ended, where gross domestic product figures rose, and the lack of robust hiring. It doesn’t take John Maynard Keynes to figure out that GDP measures are not reflecting the real situation in most American households. Companies can be doing well, creating wealth and making deals, but my guess is that they are getting by with fewer and fewer people as they automate more and, increasingly, do so with more efficient services that are easier to deploy than IT was in the past. The population grows, and it gets even worse.

Yup. It is our fault. Somewhat. That and we also don’t make enough stuff here anymore because labor is cheaper in Asia and so the supply chain of the infinite number of components has moved to Asia. Soon, it will be Africa’s turn to ascend, and the rest of the world’s middle and lower classes will feel even more pressure. But, the titans of the new age will continue to grow in their wealth and influence, and we will no doubt admire them for it. Perhaps, in my case, from a cave in rural North Carolina in my beloved Appalachians.

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.

Companies that make computer and electronic products continued to cut jobs, slashing 2,300 workers in January after cutting 2,400 in December. The pool of workers stands at about 1.06 million now. Computer and peripheral makers employed 158,800 workers, down 1,400 using the seasonally adjusted data from the BLS. Communications equipment makers employed 99,500 workers in December, down 200 people. Employment at semiconductor and electronic component makers was dead flat at 372,500 as January came to a close.

Within the information sector, which includes all kinds of publishing and broadcasting, companies engaged in data processing and hosting services employed 271,600 people, an increase of 1,800. Telecom companies slashed 10,200 workers, for a total of 847,400.

In the services sector, companies in the computer systems and design business added 4,600 employees, for a pool of 1.73 million workers, and those in management and technical consulting added 600, for a total of 1.2 million people.

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