Why the big drop?
Unemployment falls: Is it really good news?
The drop in the unemployment rate comes with an asterisk: while there was a 278,000 gain in employment, there was a concurrent labor force decline of 315,000 from October. It would be far preferable for the unemployment rate to drop because the economy is creating over 200,000 per month consistently, rather than due to would-be employees leaving the work force, either because they’re retiring or they’re simply too discouraged to keep looking for a job. If some of those people resume their job searches, we could see the unemployment rate tick up next month.
The bad news
8.6 percent unemployment is still a very high rate. In fact the jobless rate has remained above 8 percent since February 2009, the longest stretch since monthly records began in 1948. Additionally, there are still 5.7 million long-term unemployed (jobless for 27 weeks and over), which represents 43 percent of the total unemployed and the average duration of unemployment rose to 40.9 weeks, the highest on record.
Also, of the 120,000 new jobs created, 50,000 came from the retail sector, which includes a number of employees added for the holiday season. The big question is whether those people will keep their positions beyond Christmas.
But for today, we should take the improvement and hope that a combination of mildly better than expected domestic news, plus some hope that the Europeans will reach a conclusion on the debt crisis, will deliver a holiday gift to the global economy.
Mitt Romney issued the following statement today on the November employment numbers:
“Today’s unemployment figures bring to 34 the number of months that unemployment in the United States has been over 8 percent, the longest such spell since the Great Depression. The Obama administration may have come to accept such a high level of joblessness as the new normal. I will never accept it. To me, the fact that so many millions of Americans are unemployed only highlights the urgent need for a fundamental change in the direction of our country. We can’t afford another year of President Obama’s failed economic policies. And we certainly can’t afford five more years. This is not exactly the hope and change that the American people bargained for.”
5.7 million Americans have been out of work for more than 26 weeks. The average amount of time the unemployed are out of work is 40.9 weeks. Underemployment/part-timers are at 15.6%. Statistics show that when the unemployed are re-hired, they are given salaries lower than their previous employment.
Romney also appeared on Fox & Friends this morning. He was asked about the new jobs report:
“We had three years of barack Obama’s presidency. This is the slowest recovery we’ve seen since Hoover. He’s going to try and put a silver lining on a very dark cloud. But the truth is, his economic policies have made us more and more like Europe and, high unemployment and low income growth - median income in America dropped by 10%. He’s going to have a hard time putting perfume on this pig.
It’s very good news, obviously, going into the holiday season. People are shopping again; very good news that the unemployment rate is down - more people back to work. But, look overall at the President’s record on the economy - it’s been miserable.”