Unemployment News – The claims filed for unemployment has dropped to its lowest level in 9 months, but is that good news? A closer look at the Department of Labor report, released on Friday, reveals a weakness with the numbers.
There were 120,000 jobs created last month (Nov. 2011), and the jobless rate fell from from 9.0 percent to 8.6 percent.
Depending upon which estimates you look at, it takes from 90,000-125,000 jobs just to keep up with the growth in the population. This means that the 120,000 jobs that were created in November is just enough to keep the unemployment rate steady with no further decline. But it is not enough by itself to absorb all the new workers entering the labor force and at the same time reduce the fraction of people that are currently unemployed.
Experts say that the fall in unemployment claims cannot be attributed to robust job growth. We are a long way from those days — perhaps not even close to the growth we had with the previous Bush administration. I’m not trying to parade the former president, let’s remain neutral, but I am pointing out that this recent report isn’t even close to the same job growth Bush had from 2000 to 2008.
The latest report shows a decline in the labor force of 315,000 for November, and about half of the decline is attributed to discouraged workers giving up the search for a job.
This exit of workers rather than job creation is the main source of the fall in the unemployment rate, and since so much of it is from discouraged workers this is not an encouraging development.
Finally, the unemployment duration numbers continue to increase. Average search duration reached a new peak for this downturn of 40.9 weeks, and hence long-term unemployment is getting worse, not better.