and CHRISTOPHER S. RUGABER
WASHINGTON — The U.S. job market proved resilient in December despite fears that a budget impasse in Washington would send the economy over the fiscal cliff and trigger growth-killing tax increases and spending cuts.
Los Angeles Times
LOS ANGELES — For the first time since the recession began, the unemployment rate for adult women surpassed that for adult men, indicating that while the U.S. might have been in a "mancession," it also appears to be experiencing a "mancovery."
The unemployment rate for women 20 years and older rose to 7.3 percent in December, from 7 percent the month before. Unemployment for men of the same age remained at 7.2 percent in December.
The persistently high unemployment rate for women is likely a result of the large cuts in state and local governments that have come over the last year as lawmakers slashed jobs to close budget gaps. The economy lost 13,000 government jobs from November to December, and has lost 68,000 since December 2011.
Women occupy about two-thirds of public sector jobs, according to Joan Entmacher, vice president for Family Economic Security at the National Women's Law Center. Women make up a large part of local government payrolls because they are a large proportion of the teachers in the country. The nation lost 53,900 local government education jobs in the last year.
"Women are really bearing the brunt of it," Entmacher said. "Many people were talking about the recession as something that was really a problem for men, but this is a demonstration that yes, the recession did hit men faster and harder, but now we have to be creating jobs for women and men."
Employers added 155,000 jobs last month, roughly matching the solid but unspectacular monthly pace of the past two years.
The gains announced Friday weren't enough to reduce unemployment, which remained a still-high 7.8 percent. The November rate was revised up a notch from the 7.7 percent the government originally had reported.
The stable pace of December hiring suggested that many employers tuned out the fracas in the nation's capital. The threat wasn't averted until a deal won final passage on New Year's Day.
Rather than hold back until the fiscal cliff was resolved, many employers kept hiring, most likely in anticipation of higher customer demand.
"What would hiring have been if we had not been facing the fiscal cliff in December?" said Robert Kavcic, senior economist at BMO Capital Markets. "We might have seen quite a bit stronger job growth" — something closer to 200,000 a month.
That's an encouraging sign for the job market, because an even bigger budget showdown is looming: Congress must vote to raise the government's $16.4 trillion borrowing limit by late February. If not, the government risks defaulting on its debt.
Robust hiring in construction and manufacturing drove last month's job increases. Construction firms added 30,000 jobs, the most in 15 months. In part, that increase likely reflected hiring needed to rebuild from Superstorm Sandy. And the housing market's gradual recovery has energized homebuilding. Manufacturers added 25,000 jobs, the most in nine months.
Economists found other hopeful news in the report. Americans were given more work hours in December — an average 34.5 hours a week in December, up from 34.4 in November. And their pay outgrew inflation. Hourly wages rose 7 cents to $23.73 last month, a 2.1 percent increase compared with a year earlier.
Over the same period, inflation rose 1.8 percent.
"Perhaps (the) underlying economic performance is accelerating, and even Washington can't screw it up," said Dan Greenhaus, chief global strategist at BTIG.
Despite last month's hiring gains, Friday's report pointed to some weakness in the job market. For example, the number of unemployed actually rose 164,000 to 12.2 million. About 192,000 people entered the work force last month, but most did not find jobs.
The unemployment numbers come from a government survey of households. The number of jobs added comes from a separate survey of businesses.
A broader category that includes not only the unemployed but also part-time workers who want full-time jobs and people who have given up looking for work was unchanged in December at 22.7 million.
The government revised up its estimates of job growth for October and November by 14,000 jobs. October's job increases were revised down from 138,000 to 137,000 but November's were revised up from 146,000 to 161,000.
Economists said the pace of hiring almost certainly isn't strong enough to lead the Federal Reserve to cut short its bond-buying program. The Fed is spending $85 billion a month on bond purchases to try to drive down long-term borrowing costs and stimulate economic growth.
The job market is being held back by government cutbacks. Governments at all levels cut 13,000 jobs in December. Since the Great Recession ended in mid-2009, governments have eliminated 645,000 jobs — an average of nearly 15,400 a month.
By contrast, during the recoveries from the recessions of 1990-1991 and 2001, governments added an average of more than 15,000 jobs a month. If governments were hiring at that pace instead of slashing payrolls, the U.S economy would be generating more than 180,000 jobs a month.
Instead, for two full years, monthly job growth has remained stuck at a tepid pace: It averaged 153,000 in both 2011 and 2012. That isn't enough to lower unemployment to what economists regard as a "normal" rate of 6 percent or less. The Federal Reserve doesn't expect unemployment to drop that low until after 2015.
The economy has replaced just 4.8 million, or 54 percent, of the 8.8 million jobs lost between January 2008, when the job market peaked, and February 2010, when it bottomed during the recession. It has been, by far, the weakest jobs recovery since the Great Depression of the 1930s.
"A status quo report in today's labor market represents an ongoing jobs crisis," says Heidi Shierholz, an economist at the liberal Economic Policy Institute.
Still, the economy has been showing broad improvement. Layoffs are down. Banks are lending a bit more freely. Companies have built up a near-record $1.7 trillion in cash. Consumers have cut their debts to pre-recession levels. Europe has avoided a financial catastrophe.
The once-depressed housing market is rebounding. A gauge of U.S. service firms' business activity expanded in December by the most in nearly a year. Manufacturing is benefiting from the best auto sales in five years. And Americans spent more at the end of the crucial holiday shopping season.
"There is little doubt that the seeds of faster growth are being planted," James Marple, an economist at TD Bank, said in a note to clients.
That said, most economists expect slight improvement at best in hiring this year. A 2 percentage point cut in the Social Security tax expired Jan. 1. That means a household with income of about $50,000 will have about $1,000 less to spend. A household with two high-paid workers will have up to $4,500 less.
And the government may impose spending cuts this year.
Higher taxes and less government spending, along with uncertainty about future budget fights, could restrain growth and hiring.
That "likely means acceleration in the labor market will remain elusive for the time being," said Ellen Zentner, an economist at Nomura Securities.