WASHINGTON — Employers in the U.S. kept hiring at a slow and steady pace in December despite the threat of the so-called fiscal cliff, capping a mediocre year of job growth in which older workers and men garnered most of the gains and healthcare, restaurants and temporary-help firms accounted for almost half of the new payroll jobs.
The economy grew by 155,000 jobs last month, in line with analysts' expectations and right at the average monthly pace of growth over the last two years. Job growth for November was revised up slightly to 161,000 after October brought an increase of 137,000, the Bureau of Labor Statistics said Friday.
The nation's unemployment rate ended the year at 7.8%, the same as the revised figure for November. That rate, also hit in September, is the lowest since January 2009.
Although analysts were encouraged that the rancorous tax and budget battle in Washington hadn't derailed job growth last month, the report suggested no underlying change in the plodding and unsatisfactory pace that has characterized the economic recovery since it began in mid-2009.
"It's absolutely status quo," Heidi Shierholz, an economist at the Economic Policy Institute, said about Friday's jobs report. "If we were at full employment, that would be fine. But status quo at a time like this represents ongoing suffering for millions of Americans."
Although a net gain of 155,000 jobs a month is a little stronger than the natural growth in the labor force — meaning that it's enough to bring the unemployment rate down over time — the modest pace won't quickly fill the huge jobs hole left by the 2007-09 recession. As of December, the nation had 134 million payroll jobs, about 4 million fewer than at the end of 2007, when the downturn began.
Average hourly earnings for all private-sector workers edged up 7 cents to $23.73, compared with November, but that still left the gain over the last 12 months at a mere 2%, an increase eaten up by inflation.
President Obama's chief economic advisor, Alan Krueger, offered a subdued statement on the report, saying that the economy now had added private-sector jobs for 34 straight months but that much more needed to be done.
There was a smattering of positive signs in the report:
Manufacturing, sluggish in recent months, saw its strongest hiring month since early last year. The long-depressed construction sector had an even bigger month. Some of that probably resulted from recovery in the housing market, but part of it was a temporary lift from the efforts to repair the damage from Superstorm Sandy in late October. Average weekly work hours for all private-sector employees also went up a fraction.
On the other side of the ledger, local government payrolls fell again, by 14,000, mostly cuts at public schools. That brought total government employment to a new low in the current business cycle.
More cuts in government employment are likely in the short term given the prospects for federal budget reductions in defense and domestic programs. The budget agreement this week postponed scheduled automatic spending cuts, known as sequestration, for two months.
"Because sequestration hasn't yet taken place, what is likely to happen is government agencies are going to be much more cautious about hiring," said Nayantara Hensel, professor of industry and business at the National Defense University in Washington.
Another aspect of the budget deal, the end of the temporary cut in payroll taxes, probably will hurt at least some parts of the economy. The payroll tax going back up will clip an average of $40 from a worker's biweekly paycheck this year, and that means less discretionary income for things like eating out.
Employment at restaurants and drinking places like bars and coffee shops increased by 38,000 in December, pushing that sector's employment gain in the last 12 months up to 286,000.
The 7.8% unemployment rate compares with 8.5% from a year ago. But the numbers exaggerate the actual improvement in the job market, said Dean Baker, co-director of the Center for Economic and Policy Research. Part of the decline in the rate resulted from workers dropping out of the labor force, some of them discouraged about their job prospects.
In December, however, the labor force actually grew. More workers reported having jobs, and the ranks of the unemployed also increased, to 12.2 million last month, as more people started looking for jobs again, generally a positive sign that they see opportunities.
Almost 40% of the unemployed said they had been without jobs for six months or longer. That statistic has shown little improvement over the years, which is particularly worrisome as workers who lack a job for a long time often find their skills atrophy, making it increasingly difficult to find work.
For the first time in more than six years, the jobless rate for women 20 years and older, at 7.3%, was higher than the comparable figure for men, which was 7.2%. Men increasingly have moved into jobs in retail, healthcare and other sectors long dominated by women.
Older workers, those 55 and over, did better than younger workers last year, accounting for 1.78 million of the 2.41 million gains in employment, according to the government's household survey.
Among industries, healthcare and social assistance employers added 55,000 jobs last month and nearly 340,000 for all of last year. The industry has a mix of high-paying and lower-wage jobs at hospitals, doctors' offices and residential-care facilities.
Manufacturers added 180,000 jobs in the last 12 months, but most of those were earlier in the year. The temporary-help industry grew by 153,000 over the last year, accounting for about one-third of the job growth in the sprawling category of business and professional services.
But at most other major industries, including information, finance and construction, employment was either down or stagnant.
"It's another mediocre year of performance in the labor market," said Patrick O'Keefe, economic research director at J.H. Cohn, an accounting and advisory firm in New Jersey. "Where is it that we're going to see the acceleration in jobs?"
don.lee@latimes.com
