Hiring in key areas of the private sector has been bullish, but increasing layoffs in the private sector are still a major headwind to job growth.
According to the US Bureau of Labor Statistics, the construction industry, which has been hampered by a weak housing market and bad weather in the past few months, has added 33,000 jobs in February. The professional and business services industry also hired 47,000 workers.
“Part of the increase in professional and business was in temporary workers,” said Sean Incremona, an analyst at 4Cast Limited. “Hiring a temp worker is the first stage towards increasing regular payrolls.”
The job increases in the private sector has been dampened by cuts in the public sector. Due to decreased tax revenues and increased payouts to unemployment claimants, many states have had to resort to removing public employees from their payrolls to balance their budgets. Nationwide, 30,000 public employees lost their jobs in February.
The long-term effects of these budget cuts on the federal and state level are unclear. Mark Zandi, the chief economist for Moody’s Analytics estimates that the federal level cuts could result in as many as 700,000 jobs lost by the end of 2012. In his testimony before Congress, Federal Reserve Chairman Ben Bernanke said that the budget cuts would cost 200,000 jobs.
Some analysts are afraid that public sector employees would have particular difficulty in re-entering the job market.
“When you have spent many years in a public job and built up skills and experience only to be laid off later, your prospects are going to be much diminished, as there are many occupations in the public sector that don’t exist in the private sector,” said Heidi Shierholz, an analyst for the liberal Economic Policy Institute.
Most of the jobs lost at the state and local level will be in education. The federal stimulus money that was intended to prevent layoffs in education will soon run out, and many states are letting public school teachers go. In Texas alone, 100,000 teachers might lose their jobs.
“These people are experts in education, in their subjects, and in pedagogy,” says Janet Bass of the American Federation of Teachers. “Governors should be working on creating jobs. They got elected promising to do that and the first thing they are doing is laying off teachers.”
Some municipalities are also cutting down on law enforcement. Camden, New Jersey, one of the most dangerous cities in the country, recently cut its police force by half.
Jim Ryan of the New Jersey Police Benevolent Association says that when police are laid off, they are usually rehired when more senior police officers retire, but in the past 15 months, New Jersey has lost 3400 police officers.
“As every month passes, the layoffs keep getting worse, and fewer officers are finding new positions,” he says. “The ones that usually lose their jobs are usually the newest, most engaged officers.”
Part of the strain on state budgets comes from doling out unemployment insurance. Initial claims for unemployment, a rough measure of how many Americans have lost their jobs, has been steadily decreasing. In the week ending on March 5, 397,0000 people filed a claim for unemployment. The four-week moving average stayed just below 400,000. As of Feb 19, the week with the latest data, the he number of Americans receiving unemployment dropped to 8,772,818, almost half a million below the week prior.