How’s the Job Market? Look in the Mirror

05/04/2012 11:45 am EST


Igor Greenwald

Chief Investment Strategist, MLP Profits

Amid the painfully slow recovery, our job prospects hinge on race, education, and even marital status, writes senior editor Igor Greenwald.

The presidential campaign is cranking up, which means this morning’s jobs report will soon be described as:

  • Good News! Jobs are being added, and the unemployment rate is down again. Or, alternatively,
  • Misery! Job growth was below the expectations and the recent trend, even as another 342,000 people left the labor force.

Maybe the stock market will cast the tiebreaking vote, based on however traders feel at 3:59 p.m. And then we’ll know whether the European recession has finally reached Topeka, or if, instead, that the “fundamental tax reform” sold to us a decade ago as just the tonic for the ailing economy has finally started to work its magic.

All joking aside, this is pretty much the same job market we’ve had for the last year. The 115,000 non-farm payrolls added last month represented the smallest gain since October, continuing the slowdown observed in March, with job growth now at roughly half its wintertime rate.

On the other hand, February and March job gains were revised upward by 53,000. In other words, the difference between what Wall Street expected (160,000 or so net new jobs) and what it got was well within the recent error margin.

Whether the job market is pretty good, OK, or terrible is also very much dependent on the job seeker. The presumed unemployment rate among Asian Americans, for example, tumbled a full percentage point to 5.2% last month, no worse than it was coming out of the 2002-2003 recession. For college graduates, the jobless rate is down to 4%, pretty much to the point where most people losing a job can find one sooner rather than later.

Still, the jobless rate for college graduates was down to 2% before the bottom fell out in 2008. It topped out at 5% a year later. So even for this fortunate group we’re only a third of the way back to “normal,” if we define “normal” as the peak of the last boom.

On the other hand, 4% unemployment is as good as things got for those without any college schooling in 2007. The unemployment rate for that group is still 7.9%, though that’s down from 9.7% a year ago and 10.5% two years back.

Meanwhile, the unemployment rate for African Americans is at 13%. So the job market is a different beast for people depending on race, age, and educational level. Even marital status matters: 5.2% of married men with a spouse present are currently unemployed, compared with 8.2% of all men.

In the big scheme, job prospects continue to slowly get better for all groups, as the Baby Boomers now starting to exit the workforce create just enough openings to absorb new market entrants. For most of those with a job, or even just a college degree, the Great Recession has just about ended.

But the economy still lacks a catalyst to bring back many of those thrown out of a job three years ago—especially among those without a college degree, minorities, construction workers and low-level service staff dismissed by the many mom-and-pop businesses that have folded.

The social-networking boomlet, wherein a few thousand—or in some cases a dozen—people get rich by getting millions to post content online for free, is a recipe for a continued savings glut wherein the rich keep whining about not getting paid to keep money in the bank, while the 30% of the population that could be reasonably defined as the struggling poor would like to spend but can’t.

Those at the lower end of the pay scale need a housing recovery to bring back the construction jobs and some wage growth. And the rest of us are helping Apple (AAPL) create jobs in Guangzhou.

Something will turn up; it usually does in countries that don’t shoot themselves in both feet with austerity and premature rate hikes. But in the meantime, we get glacial progress on the jobs front. That doesn’t favor the sound bite or the bumper sticker, but is nevertheless the real story.

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