Will jobs report give a timely lift to Obama's record on the economy?
At 7.8 percent, the US unemployment rate is now back to the point it was when President Obama took office. But Mitt Romney say it's still not a recovery – and that the real jobless rate is closer to 11 percent.
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From an anecdotal standpoint, that explanation meshes with the experience of Andrew Ahrens of Ahrens Investment Partners in Lafayette, La. Mr. Ahrens says his boutique investment advisory firm could hire additional people. But with the "fiscal cliff" (the terminology for the budget standoff) looming, he says he is sitting on the sidelines. “I don’t like to jump out of the window if I don’t know what’s below,” he says.Skip to next paragraph
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Another indication that businesses may be holding back on hiring is the large numbers of people who were hired part-time last month. According to the BLS, the number of part-time workers rose by 600,000 in September.
“If you hire someone full time, you have to provide them with benefits,” notes John Canally, chief economist at LPL Financial, a Boston-based investment advisory firm. “But it’s also a relatively good sign because part-time jobs can lead to full-time jobs.”
Another reason for the part-time jobs could be because of the cutoff in extended unemployment benefits, he says. By the end of the year, no state will be able to offer laid-off workers 99 weeks of unemployment.
“People are realizing they are going to lose their benefits, and they are willing to take any job they can get their hands on,” says Mr. Canally. “It could be pushing them to take jobs they would not ordinarily take.”
Mr. Ahrens says he has heard stories about people who have been offered jobs but asked if the position would still be available six months later. “They say, ‘I’m just not ready for it yet,’ ” he says. “I think they are alluding to the fact they still have six months of benefits left.”
Many of those part-time jobs may have gone to young people, says Christine Owens of the National Employment Law Project (NELP), which advocates in Washington on behalf of the jobless. The BLS statistics indicate 70 percent of the jobs created last month went to people between the ages of 20 and 34.
“I am wondering if a lot of younger people moved into part-time jobs,” says Ms. Owens, who thinks the jobs report is generally positive for the economy. "It's good we got the unemployment rate back to where it was four years ago."
However, 40 percent of the unemployed have been out of work for over six months, she adds.
According to the BLS report, employment increased the most in health care, transportation, and warehousing.
Economist Canally wonders if some of the part-time jobs reflect the continuing cuts in local school districts. “A lot of teachers are losing their jobs and picking up part-time employment as school bus drivers,” he says.
That trend might continue. This week a report by Challenger Gray & Christmas, the Chicago-based outplacement firm, found that retailers had announced they would hire 413,700 workers for the holidays.
“That number is off the charts,” says Canally. “We haven’t seen that level since the mid-2000s.”
Despite the improvement in the unemployment rate, Canally says, it is unlikely that the Federal Reserve will be impressed. Earlier this month the Fed announced it would begin a new stimulus program for the economy by buying long-term securities such as mortgages. To end the program, he says, "They need to see sustained improvement."
Naroff agrees the Fed is likely to keep its foot to the pedal for some time. “The Fed won’t think the jobs market is back to normal until unemployment gets down to [a range of] 6 percent to 6.5 percent,” he says. “We won’t even get below 7 percent until the first part of 2014.”