At first glance, the news was good in last month’s jobs report. It was still good at a second glance. But a longer look shows that there are some persistent problems in the labor market.
At first glance, the jobless rate fell to 8.3%…the lowest rate in almost three years. That means that the jobless rate has fallen .8% in the past six months…the fastest decline since 1984. The economy added 243,000 jobs, and companies hired the most workers in nine months.
At second glance, there was more good news. Every January, the Labor Department updates its estimates of employment data. And this latest revision signals that since hitting the bottom in February 2010, the job market recovery has been better than we thought. Since that time, the economy has added 2.92 million jobs.
While the news was good, we still have to look at the report in the context of a sluggish economy. And beyond a glance at the headlines, the job market is a long way from healthy.
We still have 5.6 million fewer jobs than we did four years ago. And while the jobless rate fell to 8.3%, the labor force participation rate fell, too. Labor force participation is 63.7%…the lowest rate since 1983. That means that as of last month, 1.2 million people are no longer considered ‘unemployed’, they just left the system and are no longer counted. So basically, the labor force shrank…and with it the unemployment rate.
There are still 12.8 million people without a job. And of those, 5.5 million have been out of work for over six months…and their prospects didn’t improve. Being unemployed and unemployed long-term are two different things. And a recent study by the Pew Center showed that the number of people that have been jobless for over one year is still higher than any post- WWII recession.
That the unemployment is moving in the right direction is great. But with the possibility that the way toward a lower jobless rate is through fewer workers and people dropping out the labor force, that good news takes on a different tone.