Hiring Increases, But Jobless Rate Inches Up to 8.3 Percent

Business employment specialist Linda Reynolds helps job searcher D'Andre Preston at WorkSource Oregon on July 17, 2012, in Tualatin, Ore.

The national unemployment rate inched up slightly to 8.3 percent for the month of July, according to the latest monthly jobs report from the Labor Department.

[See why a better economy may not fix the jobs problem.]

Though the headline number ticked upward, the economy also added far more jobs than expected, with 163,000 new jobs last month—the most in five months. Economists surveyed by Bloomberg, for example, had predicted a bump of 100,000 jobs.

Still, a stubbornly high unemployment figure is a troubling sign. Job troubles have recently been far-reaching, with no particular industry showing encouraging growth, says Brad Sorensen, Director of Market and Sector Research at Schwab.

"I don't know that there's any specific industry that is looking particularly strong at this point in time, unfortunately," he says. Likewise, he adds there aren't industries that are looking particularly abysmal. "There are pockets, but really, in general, it's really just broad-based."

According to the figures, professional and business services added 49,000 jobs last month, with education and health services adding 38,000 and leisure and hospitality growing by 27,000 jobs. Manufacturing also posted solid growth, at 25,000 jobs.

Meanwhile, government and construction saw declines, losing 9,000 and 1,000 jobs, respectively.

Still, there may be hopes for a boost in construction jobs. Recent improvements in home prices provide some encouragement that this industry hit hard by the recession will be able to boost employment soon.

[See what stores are growing the most.]

"We have seen housing start to improve," says Sorensen. "And it's not going to be a quick improvement or a really sharp improvement. [But] we have seen new home sales start to improve, and that should lead to new homes starting to be built."

A recovery in housing, of course, would not only boost construction jobs but could provide some of the momentum the economy needs to start adding enough jobs consistently to bring the unemployment rate down.

Still, drags on the economy remain, in the form of an ever-present European debt crisis and an impending "fiscal cliff" as Bush-era tax cuts expire and mandated spending cuts kick in if Congress fails to act by January. Many businesses cite uncertainty over what will happen as a reason for the slow pace of hiring this summer.

Because it comes after the Great Recession and amidst an excruciatingly slow recovery, the lead-up to the cliff may not in fact cause many job losses; rather, it will just mean that uncertain employers will be leery of adding very many new workers to their payrolls, says one expert.

"When people leave [their jobs] today, they have to be replaced. Companies are as lean as they possibly can be right now," says Dave Campeas, president and CEO of recruitment services firm PrincetonOne. While companies may not add lots of new positions in the coming months, he says, they also may be hard-pressed to eliminate positions.

[Read: Is QE3 coming in September?]

Still, the nearly 12.8 million unemployed Americans would surely like to see employers doing more. The key, according to Brian Hamilton, CEO of financial information company Sageworks, is Washington tackling its deficit problems.

"Everybody knows that too much spending is the big problem – so big that no one wants to face it," he says. "But the lingering effect of not doing anything is that everyone is nervous. And when consumers and businesses are skittish about spending, companies throughout the U.S. will remain too nervous to hire."

Danielle Kurtzleben is a business and economics reporter for U.S. News & World Report. Connect with her on Twitter at @titonka or via E-mail at dkurtzleben@usnews.com.

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A Better Economy May Not Fix The Jobless Problem

Jobseekers out of work for a very long time are pulling the average length of unemployment upward.

The unemployment rate has fallen from a Great Recession high of 10 percent in October 2009 to 8.3 percent, according to the latest jobs report from the Labor Department.

But make no mistake: in two key ways, the labor market has gotten worse.

The average length of unemployment is remarkably high, at 38.8 weeks, and it has been stuck near or above 40 for over a year. Compare that to the healthier year of 2006, when it mostly hung around the 17-week mark. Even when unemployment was at 10 percent, the average time that Americans were spending out of work was 27.6 weeks.

"The crucial thing about this recession is that the unemployment is remarkably long-duration compared to any previous recession, even the one that was just as deep, the 1981-82 recession," says Daniel Hamermesh, professor of economics at the University of Texas-Austin. "That means it's concentrated on fewer people. ... That's a crucial difference in this recession."

[U.S. Unemployment Applications Rise to 365,000]

Indeed, the unemployment rate soared as high as 10.8 percent in late 1982, but the average length of that unemployment then never went above 21.2 weeks.

That's one scary aspect of the jobs situation, but it gets worse: a quick look at the figures shows that that average is running away from the median, which is at 16.7 weeks.

A quick refresher: the median is the middle value in a given set—the median of 5, 6, and 8 is 6, for example. Likewise, the median for 5, 6, and 100 is 6, though the average of that set is much higher.

Why does it matter? It could mean that even while the jobless rate and the median length of unemployment hold steady, the unemployment problem is growing more stubborn by the day. If the average is growing while the median holds steady, it means there are people at the upper end of the spectrum, who have been out of work for a very long time, pulling that average higher.

"I'd rather have 10 people unemployed for 10 weeks, let's say, than one person unemployed for 100 weeks," says Hamermesh.

The amount—and type—of effort it will take to get all 10 people in either group back onto the job will likely differ very much, he says.

Workers who have been out of work for two years, for example, may find that their skills have deteriorated and may have to learn new skills. A worker only out for a few weeks, meanwhile, more likely has skills that are still in demand.

"It has tremendous implications for how you spend money on training [and] re-education," says Hamermesh.

So simply trying to boost demand via a fiscal stimulus program or tax cuts, for example, may not be enough to bring the job market back, if people out of work need new skills.

Then again, data on the effectiveness of job retraining programs is inconclusive, as the Wall Street Journal recently reported. Workers who complete some programs are not tracked, and data on those who are tracked show that a depressed economy still can make a job search more difficult.

The sad truth is that getting long-unemployed people back on the job is going to be a daunting task.

"I think employers just by definition are risk-averse. If somebody hasn't had a job for 18 months, say, that makes them at least a little more risky" as a hire, says Brad Sorensen, director of market and sector research at Charles Schwab. "Then I think on the other side that the longer you're out of work the more hopeless you become and the less aggressive they are to find new jobs and to upgrade skills."

That creates a vicious cycle that could be many months in the breaking. "I think it's a two-way street that unfortunately feeds on itself," says Sorensen.

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