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US job market still limp

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The US economy added 103,000 non-farm jobs in December, but just as in November, American employers added significantly fewer jobs than economists had been expecting.

In this case, those who make such prognostications had predicted 175,000 new jobs (net) to be created.

The good news, according to the December jobs report release by the Department of Labor this morning, is that the Bureau of Labor Statistics - which tracks jobs created and destroyed each month and comes up with the unemployment rate by polling households and businesses - finds the US economy has been creating more jobs than each monthly report has said. (This would seem to suggest the BLS methodology needs some improvement).

In any event, the BLS says it now believes that US employers added 210,000 jobs in October (not the 151,000 originally reported) and 71,000 in November (not the 39,000 originally reported), and this has put some downward pressure on the unemployment rate.

The official number of unemployed people in the US as December came to a close now stands at 14.5 million, with the unemployment rate dropping to 9.4 per cent. As 2010 got its start, 15.2 million people were out of work and the unemployment rate was 9.9 per cent and kept climbing as the year went on.

The Federal government added hundreds of thousands of people to the payrolls to do the census, which is taken every ten years in the States, and that helped cushion the economy in early 2010. But most of those employees have been let go, and that hurt.

Private sector companies are now doing a better job of filling in the gap left by Uncle Sam as well as state and local governments, which are all in budget crisis in the wake of the Great Recession.

In December, for instance, governments cut a net of 10,000 jobs and private companies added a net of 113,000 employees. Still, just to keep up with population growth, the US economy needs to add 200,000 jobs per month, and to get rid of that backlog of unemployed people it needs to do a lot better than that if the unemployment rate is going to get back down to somewhere between four and five per cent, a level it was at before the recession started in December 2007 and what can be thought of as a structural level of unemployment.

The BLS tracks jobs by industry, not by job title, so it is hard to get a sense of what jobs are being slashed and what types of employees are in demand. (Which just goes to show you that you can do all the data warehousing in the world, but if you gather and crunch the wrong data, perhaps the effort is just a bit useless. If the Labor Department was serious, it would compel US employers to give their employees standardized titles and then track hires and fires by job title and salary level each month, helping us all choose and manage our careers a little better.)

A lot of IT vendors get lumped into the manufacturing industry, which added 10,000 jobs in December 2010. Companies in the construction industry shed 16,000 jobs last month, while mining companies added 5,000, healthcare companies added 36,000, temporary help services firms added 16,000, and retailers added 12,000. (You can see the December 2010 jobs report here (pdf).)

Within the manufacturing sector, computer and electronics makers had over 1.1 million employees in December, an increase of 5,900 workers compared to November of last year. Within this group, computer and peripheral equipment makers added 1,900 jobs, hitting 165,500, while communication equipment makers added only 500 jobs, reaching 123,600 employees. Semiconductor and electronic component makers had 371,800 workers as 2010 came to a close, up 2,700 people since November.

There are some IT components of the broad information sector tracked by the BLS, which includes printing, publishing, TV, radio, movies, telecom, data processing and hosting, and other information services. Telecom companies continued to chop their payrolls in December, shedding 2,400 people to a labor pool of 916,500 across the United States. Data processing and hosting companies added a meager 300 workers, to 246,000.

IT-related services jobs continued to grow, with computer systems and design services companies adding 2,100 workers and yielding 1.49 million total workers in this area. Management and technical consulting services firms added 4,600 people and now employ just over one million workers.

What is not clear from the BLS data is how many true IT people are employed as programmers, system administrators, network gurus, project managers, and so forth and how many more have skills in these and other IT fields and still cannot find work. It would be enlightening to know each month how many of such jobs get outsourced by IT companies and non-IT companies alike.

It seems highly unlikely that such information will ever be gathered, much less made publicly available, considering the hot political potato that offshoring and outsourcing can be. It is far safer to keep talking about the employment and unemployment issues in an old way that is fundamentally flawed. ®

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