Job growth slowed again in April; rate ticks down

By Paul Wiseman

Associated Press

Published: Friday, May 4 2012 12:00 a.m. MDT

The categories of manufacturing and education and health services added the fewest jobs in five months. Hotels, restaurants and entertainment companies added the fewest in eight months.

Friday's report noted that that the average hourly wage went up one penny in April. Over the past year, average pay has increased 1.8 percent, almost a full percentage point shy of the inflation rate, which means the average American isn't keeping up with price increases.

Even April's bright spot, the lower unemployment rate, fades on closer inspection.

The government only counts people as unemployed if they're looking for work. And 340,000 Americans stopped looking and dropped out of the labor force in April, which is why the unemployment rate fell slightly. The dropouts mean just 63.6 percent of working-age Americans were working or looking for work, the lowest since 1981.

It has been almost three years since the Great Recession ended in June 2009. Economists say countries usually flounder for several years after a financial crisis like the one that hit the United States in 2008.

Damaged banks are reluctant to lend. Borrowers who took on too much debt in the good times change their ways, cut their spending and try to repair their finances. The economy grows slowly.

And after this financial crisis, the economy is trying to gather speed without two of the engines that usually help power economic recoveries: housing and government spending.

A housing collapse caused the crisis, and home construction isn't doing much to lead the way out. Housing hasn't contributed to economic growth since 2005, though a recent burst of apartment construction might change that this year.

Government hiring also normally boosts employment after a recession. Not this time. Cities, towns and counties, especially, have been cutting employment. Private employers have added jobs every month since February 2010, noted Gary Burtless, senior fellow in economic studies at the Brookings Institution. Over that same period, government payrolls have dropped by 500,000.

Local governments are beginning to recover some of the tax revenue lost in the recession and its aftermath. But government hiring hasn't started yet: 15,000 government workers, most of them in local schools, lost their jobs in April.

The recovery has one thing going for it: Even meager gains in jobs will feed on themselves and create growth that eventually becomes self-sustaining. The hiring leads to spending, which stimulates demand and leads to more hiring, which leads to more spending. The country has created 1.5 million jobs in eight months.

The economists AP surveyed said they believe the economy has entered such a "virtuous cycle." But they said they don't expect unemployment to reach a healthy level — below 6 percent — until 2015 or later.

Until then, many companies are likely to behave like the North American division of Philips, the healthcare and consumer products company. It is hiring, but more slowly than in years past.

The company is trying to fill 400 jobs, including 127 in Cleveland, where it has a plant that makes medical imaging equipment. Things are improving, said Cynthia Burkhardt, the company's vice president of talent acquisition. But "I wouldn't say that we're full steam ahead right now. Everyone's cautious about the economy."

Associated Press writers Martin Crutsinger and Kasie Hunt contributed to this report.

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