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Hiring Surge of 290,000 as People Begin to Look For Work Again

We’ve seen months over the last year where the unemployment rate stayed the same or went down despite a loss of jobs. Now we have a month where the unemployment rate goes up despite the best hiring in several years.

Nonfarm payroll employment rose by 290,000 in April, the unemployment rate edged up to 9.9 percent, and the labor force increased sharply, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in manufacturing, professional and business services, health care, and leisure and hospitality. Federal government employment also rose, reflecting continued hiring of temporary workers for Census 2010.

How could the unemployment rate rise in April with 290,000 new hires? Simple – people started looking for work again. Remember, the unemployment rate doesn’t factor in people who have left the job market. As those people see employers hiring again, they return to find work, and they get counted again (how the Bureau of Labor Statistics determines if someone is in or out of the labor force is a bit above my pay grade). Larry Mishel of the Economic Policy Institute explains:

The rise in unemployment reflects a predictable surge of people entering the labor force as we see the fourth month of positive job growth. Since December the labor force, those working or looking for work, expanded by 1.9 million. However, this only corrects for the comparable decline between May and December of 2009, leaving the labor force no bigger now than in May 2009. In fact, given the 1.6 million growth of the working age population in that period we might have expected the labor force to grow by over 1.0 million (if over 65% of the population is in the labor force). So, we still have a 1.9 million backlog of people  (calculated as the decline in the labor force since the start of the recession) we can expect to return to the labor force as job growth  continues: this means that we will need to see this continued strong or stronger job growth to get the unemployment rate moving downward. “

Fortunately, we are starting to see real hiring. Even if you strip out the 66,000 temporary Census workers in this month’s data, you’re still looking at 224,000 private-sector increases. And the February and March numbers were both revised upwards, showing consistent job growth in the first four months of this year, with April being the highest number yet. The average hours increased slightly, too.

This doesn’t mean we’re out of the woods. The hiring needs to be sustained, given the backlog of people expected to enter the labor force. There are still a lot of discouraged workers and forced part-time workers out there. One in ten people who want a job still do not have one. And the shortfall in state budgets as well as the gradual end of the stimulus package will kick the stilts out of what is still a fragile recovery, if there’s no help.

But this number reflects a stronger bounce-back for the labor market than the previous Bush recession of 2001, when hiring took years to recover. This was a deeper Bush recession, but thankfully, hiring is returning.

UPDATE: Richard Trumka of the AFL-CIO writes:

It’s important to remember that the economic recovery supporting this job growth remains fragile, however. Despite positive signs of continued growth in manufacturing and construction jobs, some of the overall job gains still depend on factors – government stimulus, inventory re-stocking and census hiring – that are likely to fade through the year.

We urge Congress to act quickly and decisively to enact legislation that invests in our future, gets workers back on their feet now and protects against repeat financial crises.

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David Dayen

David Dayen