January 2013 Jobs Report: 4 Reasons Unemployment Will Stay High

The lackluster January jobs report highlights four of the biggest factors that will weigh on an economic recovery this year.

Here’s a closer look:

• Weak Labor Participation Rate

Since U.S. President Barack Obama took office in January 2009, the economy has created only an anemic 460,000 additional jobs.

The labor participation rate, the percentage of Americans who have a job or are looking for work, is at the same level as 1981, the start of a decade when some 12 million women entered the workforce looking for jobs.

The percentage of employed adult men 25-54, the biggest chunk of workers, has fallen from 90% in 1989 to 82% in 2012.

Meanwhile, the unemployment rate for teenagers aged 16-19 is a whopping 23.45%.

• Underemployed

A new study from the non-profit Center for College Affordability and Productivity found that nearly half of working Americans with college degrees are settling for jobs for which they are overqualified. Others opt to extend their education instead of facing a very difficult job market.

The trend is expected to continue over the next decade.

“It is almost the new normal,” Richard Vedder, an Ohio University economist and founder of the center, told USA Today.

• Unwilling to Retire

Older workers are increasingly delaying retirement and continuing to work past age 65, staying in jobs that otherwise would normally be filled by younger workers.

According to data from the Census Bureau, the share of workers ages 65-plus in the labor force jumped from 12% in 1990 to 16% in 2010.

“We will have to work a lot longer to get by with less. It’s just getting a lot more expensive to be old than it used to be,” Olivia Mitchell, professor of economics and executive director of Pension Research Council at Wharton School of Business, told USA Today.

• Obamacare and Budget Cuts

Also tempering hiring is the Affordable Care Act, or Obamacare.

Employers with more than 49 workers who don’t offer a certain type of health insurance face penalties of $2,000 per full-time worker starting next year. Larger firms face even higher fines. Firms are bracing for the fines by laying off workers, implementing hiring freezes and slashing hours.

The steep spending cuts set to kick in next month have kept scores of employers from expanding, investing and adding workers. Many more have simply let people go in anticipation of the cuts.

The next jobs report for 2013 will be out Friday, March 1.

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