Putting November’s Jobs and Unemployment Numbers in Perspective

| December 8 2012
Today’s report from the Department of Labor shows that a net total of 146,000 jobs were created and the unemployment rate fell to 7.7 percent in November.  While any job creation is welcomed, it is important to put them in perspective.

Jobs

Due to the size of the American workforce, gaining 146,000 jobs per month just won’t cut it.  The country is still more than 4 million jobs short of its peak of 138 million in January 2008.  As the Brookings Institution chart below shows, at this pace, it will take well past 2025 until all the jobs lost during the last recession are recovered.  At over 16 years, this would be more than twice as long as it took to recover the jobs lost during the Great Depression.

Unemployment

The unemployment rate fell in November because 350,000 people gave up looking for work and dropped out of the labor force, not because significant numbers of Americans found jobs.  In fact, the survey that is used to calculate the unemployment rate showed that employment actually fell by 122,000 last month.  Throughout the Obama Administration, Americans have been dropping out of the labor force in droves.  This has led to significant “invisible” unemployment, as jobless individuals are no longer counted as officially unemployed once they have dropped out of the labor force and are no longer searching for work.  If these “invisible unemployed” individuals were in the official labor force, they would be counted as officially unemployed – raising the current 7.7 percent unemployment rate to almost 11 percent.

Sources: January 2009 Romer/Bernstein Report (“Administration Prediction With Stimulus Plan”), actual U.S. Department of Labor data and Ways and Means Republican staff calculations of “invisible unemployed.”  The “invisible unemployed” are defined as unemployed persons not included in official unemployment rate calculations because they are not currently in the labor force, compared with the month Democrats’ stimulus passed (February 2009).  This includes people who quit looking for jobs since stimulus passed and dropped out of the labor force, plus other working-age adults who never entered the labor force, but presumably would have if the labor force participation rate was the same as when stimulus passed.
While any increase in employment is positive, this month’s numbers simply don’t cut it.  Employers are looking for a resolution to the fiscal cliff and some certainty for the future before they begin hiring once again.  Republicans have done their part.  It’s time for President Obama to come to the table with a serious offer to rein in Washington’s out-of-control spending and put our country back on track.
7 comments
Bajaburns
Bajaburns

Over a period of 16 years the size of the potential labor force will have grown significantly, so even getting back to that level of jobs is not much of an achievement.

Samuel Reich
Samuel Reich

If it is taking this long to recover there is long term problems in the economy.   Some I know of are:  We pay more for education and health care than most other advanced economys  with worst results  WE and other high wage nation run trade deficits for the past few decades, which means the free trade idea does not work for them and should be changed to tax excessive imports and grow those export industries that pay high wages.   We tax the firms that are growing jobs and exports at the same rate those that cut jobs and exports or going out business.  Obviously growing firms that pay good wages and export should have a low tax rate.   Firms with losses should have high rate and be taxed on the losses they wasting resources.  Likewise capitol losses should be taxed not capitol gains.

Independent Dave
Independent Dave

Just because I no longer qualify for unemployment does not mean I'm not looking for work. Only those  receiving unemployment benefits are currently counted as  unemployment. The Department of Labor lists us as "exhaustees" but not as unemployed. I can see how the "unemployment rate" could go down if you don't include the long term unemployed. This recession has gone on for five years and the unemployment benefits only last one year. 

WesternFreePress
WesternFreePress moderator

 @Samuel Reich What you are describing is somewhat complex. Complex rules require large, complex, heavily bureaucratic government to implement and maintain, and that is a system that is proving to be both failed and immoral. We'd be far better off reducing rules, and reducing what government does, and allowing human beings to govern our own lives to a much greater degree. Simple, easy taxation in order to pay for a small number of nonexcludable public goods (military, police, courts, some infrastructure) is all we need. Trust in people, acting freely and voluntarily!

Samuel Reich
Samuel Reich

 @WesternFreePress The idea of non government failed in 1929 and 2008.  With out regulations expect killing drugs and drugs and drugs that do not work.  As we have more and more dangerous things expectg the need for more regulations.  There are a lot of people out there that will kill for a dollar in high places.

 

Complex so what, business have professionals who spend their time on taxes and book keeping.  Mom and pop operations are not going to export or hire much non relatives at much more than the minimum wage.  The is such a thing as economic scale firms small are not competitive but too few large firms rig the market.  There a governments aim is a to favor firms of near economic scale.

 

The one place we should reduce complexity is in the voting booth.  We have too many local officials to volt for who are not covered by the press or known to much voters.  Ten is common span of control for most managers.  We should not expect more from the voters.  Therefore, state and local governments should eliminated.  To give each voter about ten people to volt for that are covered by the press, who should get a piece of all graft they report.