(Northeast) Officially released statistics show that seasonally-adjusted nonfarm hiring in the northeastern US is down 2.9% in Mar., falling to 695,000 (solid line in chart). This brings it back to level with its 12-month moving average (dotted line in chart), and demonstrates that there is no recovery yet in hiring since the onset of the so-called “great” recession.
As one measure of labor under-utilization reported by the Bureau of Labor Statistics is elevated at 13.9%, and business remains “skittish” about further hiring and investment, worries about permanent damage to the US labor force are mounting. These worries stem from the millions of long-term unemployed, discouraged workers, and under-utilized college graduates whose skills are deteriorating, making it less likely that when or if they ever find employment, they will be as productive as they could have been without a long period of joblessness or under-utilization.
The continued slump in hiring by business after the expiration of extended federal unemployment benefits belies the earlier claim that unemployment was high because the unemployed were simply taking their checks and remaining idle. There is clear failure in the labor market: it cannot deliver full employment.
Since long-term economic growth is strongly anchored to labor productivity, there is real concern that long-term prospects for the US economy are also diminishing, as business remains incapable of employing these people optimally. This is one very strong reason supporting another large fiscal stimulus plan – to prevent long-term damage to the US labor force and the economy.