- The Washington Times - Saturday, January 8, 2005

The economy created 157,000 jobs last month, a solid gain that capped the best year for job creation since 1999, the Labor Department reported yesterday.

Last year 2.2 million jobs were created, with growth in nearly every area from the booming construction, health care and education fields to the beleaguered technology and manufacturing sectors. December’s gains mirrored the year-long trend.

The addition of jobs was just enough to keep up with the growth in workers caused by immigration and population growth, holding the unemployment rate steady at 5.4 percent.

President Bush, in a photo opportunity at the White House, celebrated the “positive” job news. Last year’s gains, spurred by a recovery from recession, historic lows in interest rates and $2 trillion of federal tax cuts, came just in time to boost his re-election after a three-year job drought.

“More and more Americans are finding work,” he said, noting that job growth was solid not only in December but also in November, when the department had reported a tepid gain of about 100,000. Yesterday, the November figure was revised up to 137,000, reflecting in part more hiring by retailers before Christmas.

“Economic conditions continue to strengthen, albeit at a somewhat choppy pace,” said Richard Yamarone, research director at Argus Research Corp., noting the economy entered its fourth year of expansion at the end of 2004 with a substantial pickup in job growth.

Consumer confidence and the stock market also rebounded at year’s end, reflecting the job gains as well as a dramatic drop in oil prices from more than $55 a barrel in late October to about $45 yesterday.

While confidence and economic growth could fall off early this year if some 425,000 announced job cuts turn into actual layoffs, Mr. Yamarone said, the economy should continue to be bolstered by a trend toward self-employment that is not fully reflected in the monthly job figures.

Since the recession and terrorist attacks in 2001, millions of people have chosen to work from home as independent contractors, with some starting their own businesses.

These independently employed workers do not show up in the tally of jobs derived from the department’s survey of businesses each month. But they have been pushing up measures of employment in a separate survey of households by the department, which includes the self-employed.

Since 2001, technological advances such as cell phones and home computers with broadband access to the Internet have made working from home and starting new businesses easier and more profitable, Mr. Yamarone said.

Technology changes are wreaking havoc with other aspects of the jobs report, he said, most notably the figures on retail hiring, which have been disappointing for the past two Christmas seasons.

Fewer workers are being hired at department stores and mall outlets, he said, because more consumers are purchasing gifts online.

The exponential growth in Web sales, while draining traditional retail jobs, is spurring sizable gains in employment at transport companies such as UPS and FedEx, he said. Transportation and warehousing jobs are up by 104,000 in the past year.

While the job market is improving, yesterday’s report shows how scarce jobs continue to be for laid-off manufacturing workers and people with less education and limited skills.

Despite the addition of 75,000 manufacturing jobs last year — the first since 1997 — the nation still has 2.7 million fewer factory jobs than it did in January 2001.

“Manufacturing is dying a slow death” as the economy is increasingly overtaken by service businesses with jobs that require innovation and intellectual ability, Mr. Yamarone said.

Most factory jobs now can be done in countries such as China and Indonesia, where wages are low and benefits are nonexistent, so the drain of manufacturing jobs that started in the 1980s will continue, he said.

This creates particular hardships for unemployed manufacturing workers who have little formal education. Yesterday’s report shows the unemployment rate for adults who dropped out of high school, at 8.3 percent, is 50 percent higher than the national average.

In contrast, unemployment among college graduates, at 2.5 percent, is less than half the national average.

“We must focus on the growing skill gap facing our work force,” said Craig Garthwaite, director of research for the Employment Policies Institute, a union-backed think tank.

“As our economy continues to evolve and create higher skilled employment, it is critical that we develop the skilled employees for these jobs.”

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