Academic journal article Monthly Labor Review

1992: Job Market in the Doldrums

Academic journal article Monthly Labor Review

1992: Job Market in the Doldrums

Article excerpt

Manufacturing continued to lose large numbers of jobs, and other industries had small employment declines; only services and government added substantially to their employment, but with weaker gains than in the 1980's

The labor market was sluggish in 1992, as the economy struggled to regain ground lost during the 1990-91 recession. Employment grew little over the year, while unemployment rose in the first half, but edged down in the second.

Nonfarm payroll employment - as measured by the Bureau of Labor Statistics monthly survey of employer payrolls - increased by only about 450,000 between the fourth quarters of 1991 and 1992; this modest gain left employment about 1.5 million below its prerecession peak. Only the services industry and government had substantial employment gains over the year, and, even in these areas, job growth was much slower than during most of the 1980's. In other industries, employment fell or was little changed during 1992. Manufacturing, in which employment has been on a downward trend since the beginning of 1989, posted the largest job losses.

The proportion of the population with jobs - as measured by the BLS survey of households - was 61.4 percent in the fourth quarter of 1992. That figure was unchanged from a year earlier and well below the peak rate of 63.0 percent reached in 1989 and the first half of 1990.(1)

The fourth-quarter 1992 unemployment level, 9.3 million, and the unemployment rate, 7.3 percent, were both slightly higher than they were a year earlier. This rise in joblessness resulted from a burst of labor force growth in late 1991 and the first half of 1992, combined with further job losses and very slow employment growth throughout the year, As labor force growth slowed in the second half, the unemployment rate edged down. The fourth-quarter rate, 7.3 percent, was still some 2 percentage points above its prerecession level.

This article summarizes national developments in the labor market in 1992, beginning with an overview of the economy during the year. For a discussion of employment and unemployment trends in the different regions of the country, see "Atlantic and Pacific coasts' labor markets hit hard in early 1990's," elsewhere in this issue.

The jobs-confidence loop

After falling 2.2 percent between the second quarter of 1990 and the first quarter of 1991, gross domestic product (GDP) - the Nation's total output of goods and services - grew at a weak and erratic pace for the balance of the year and through the first half of 1992. Although GDP growth picked up in the second half of 1992, at year's end, real GDP had risen only 3.8 percent from its low point in the first quarter of 1991. In contrast, over a comparable period following the troughs in GDP for die 1973-75 and 1981-82 recessions, real GDP growth totaled 8.3 and 10.4 percent, respectively.(2)

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As is always the case, labor market conditions and the overau state of the economy were closely linked in 1992. The demand for workers is derived from the demand for the goods and services they provide; and, conversely, the ability of individuals to purchase goods and services depends on their ability to find jobs and to earn income. In 1992, the economy appeared to be caught in a loop, whereby slow economic growth and a poor job market reinforced each other's effects. Certainly, the slow growth in the largest component of GDP, Consumer spending, can be linked to the poor job market.

Despite marked improvement during the last half of the year, personal consumption expenditures, which make up two-thirds Of GDP, failed to provide their typical postcontraction boost to economic activity. To a large degree, the relatively weak pattern of spending reflected consumers' concerns about the direction of the economy. The index of consumer confidence, although up in the final months of 1992, remained low relative to its prerecession level. …

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