Earlier this year, President Obama appointed Erica Groshen to a four-year term as commissioner of the US Bureau of Labor Statistics, the arm of the Labor Department that tracks unemployment, wages, and other job market data. Groshen, who received her PhD in economics from Harvard University, recently visited Boston. She spoke with reporter Megan Woolhouse about the state of the labor market, federal funding cuts, and why employers have been slow to add jobs.
The BLS collects an enormous amount of data about employment — and unemployment. What warrants attention?
Labor force participation. It’s still declining. Very unusual for this stage of recovery. Participation grew during the official part of the recession and has been declining ever since.
The number of people in the long-term unemployed ranks, it’s huge. Coming down, but huge. The other thing that we worry about are government jobs. They have been declining. That has implications for the wider economy in terms of how it affects overall growth.
How have across-the-board federal budget cuts known as sequestration affected BLS operations?
We’ve put highest priority on protecting the core quality of our data, so that’s meant we have ended three programs to protect the quality of the remaining programs. In addition, we took a number of belt-tightening steps. We curtailed travel, hiring, training. All of these things will have some impact on the quality of our data, but we’re hoping we can recover from that.
Have there been layoffs?
What’s the state of the labor market?
We know that job destruction, layoffs, are getting pretty close to prerecessionary levels. But job creation is still lagging.
By how much?
The average for the past year has been in the 190,000 jobs per month range, and that is probably a little over where it needs to be to keep up with population growth. At this pace, it’s going to take us a long time, another 14 to 15 months, to get to a prerecessionary peak of jobs.
Where are we now in the recovery?
The slow pace of recovery continues, it has not picked up. The hope was because the recession was so deep we would have a rapid recovery. We are on a very similar trajectory in the [slow] pace of job growth [following] the last two recessions, which suggests changes in human resource practices may have something to do with the slow pace of recovery.
What do you mean when you say changes in human resource practices?
There is a movement toward lean staffing. The idea there was that you identify the core set of skills, the core set of employees, that you need to operate, and you make sure that you have those on staff. Beyond that, you staff yourself very flexibly by using temporary staff, contract staff, outsourcing, whatever.
In the old world, if there was a recession, you’d say, “Well, I’m going to need these workers again when demand returns. So in the short run, I won’t lay anybody off because I may need them at any moment.” Times get worse, you lay them off temporarily because you want to be able to call them back. So you maintain a connection.
In this new world, what you have is a core set of workers. The other ones you release permanently because you’re not that invested in them. Any kind of a downturn is an opportunity to restructure.
Are there other concerns for workers?
Another sign of the weakness in the labor market is no wage growth — barely enough to keep up with inflation.
Have wages bounced back for some professions?
You’d be hard pressed to find a profession where you’re seeing much wage growth.
So again, how would you characterize the overall state of the labor market?
The labor market is improving slowly as it has been since the end of the recession. But we have a long ways to go yet.