A full year of jobs data is now in, and the results for 2012 seem to be firmly entrenched in "meh" territory. Job growth has solidified around a monthly pace of 150,000, but is having trouble accelerating beyond that. While a strengthening economy could boost job growth in 2013, plenty of headwinds remain.
Even if lawmakers manage to overcome gridlock and eliminate the uncertainty that has plagued businesses recently, there are many more underlying problems that the job market will have to shake off if it is to grow much faster. Below are five charts illustrating exactly what is hampering the job market.
Plenty of service, not enough stuff.
In the recent jobs recovery, the services sector has pulled its weight. The goods-producing sector? Not so much. It has bounced back from its post-recession lows, but still has slightly fewer jobs than it did at the end of the recession in June 2009. Meanwhile, private-service providers have added more than 4 million jobs since then.
Not only have new jobs been concentrated in the service sector; they've been concentrated in a few areas, like temporary help services, health care, and leisure and hospitality, according to Patrick O'Keefe, director of economic research at accounting firm CohnReznick. He says this may bode poorly for the job market, as a few industries have been pedal-to-the-metal for so long. Health care may be able to maintain its steady growth, but leisure may not be able to accelerate much more. Likewise, retail may not be able to maintain its recent acceleration forever. "You look at the data and you say, 'Where would we accelerate?'" he says. "Until the goods producers begin adding jobs at a faster pace than has been the case, and until the service sector begins to grow on a wider berth, it's difficult to see where the acceleration comes from."
While there is some reason for optimism in construction, with more new housing starts promising more jobs, manufacturing has managed to ramp up its productivity without adding many new workers, meaning that it's tough to see how the 5 million jobs the industry lost since the start of the century will come back.
Not just any jobs will do.
The less educated the group, the higher the jobless rate. The jobless rate for people with bachelor's degrees or higher was 3.9 percent in December, well below the rates for those who did not finish college, as well as those who never attended college. However, the jobless rates have fallen far for other categories of workers from their recent peaks.
That means that many new jobs will have to appeal to less-educated workers. Those jobs won't necessarily be low-wage; construction work often pays well, as do technical jobs that workers obtain through apprenticeship programs. Still, many other jobs that tend to have lower educational qualifications tend to be in areas like hospitality and food service. That can mean hard work for little pay.
"They're not high-paying jobs, they're not going to become high-paying jobs," says Nigel Gault, chief U.S. economist at IHS Global Insight. "I don't see a lot of good jobs out there for people who don't have qualifications."
More unemployed people than meets the eye.
People just aren't looking for jobs the way they used to. The labor force participation rate for 2012 was roughly where it was in 1979, and down from highs of over 67 percent in the late 1990s and early 2000s.
Why does it matter? Because the unemployment rate only counts people in the labor force—those who are employed or looking for work. That means there are plenty more unemployed people who are not in the labor force, but who would still like a job.
The number of people who would like a job but have stopped looking, or "discouraged workers," has swelled considerably. It was at a non-seasonally adjusted level of roughly 1 million in December, well above the 300,000-500,000 range it generally held in the early part of the 2000s.
This means that the jobless rate could have trouble inching downward in 2013. On the bright side, however, it may also mean that a flat or even growing jobless rate throughout 2013 might be a good thing. More people in the labor force may signal that unemployed people feel optimistic enough to look for work again.
Workers getting paid peanuts.
Jobs have picked up since the recession. Wages have not. Average weekly earnings in December 2012 were around $819 in the private sector. However, when adjusted for inflation, earnings have fallen since the recession. A large supply of eager workers and a dearth of jobs can mean a buyer's market for employers—they can afford to spend a little less on their employees.
Jobs have managed to recover while wages have fallen, but spending drives economic growth. If workers have smaller paychecks, that means less economic activity, meaning less job creation.