December’s employment report was supposed to be the coming out party for those predicting a return to glory for the jobless. Unfortunately that did not happen as only 103,000 new jobs were added during the month, which came in well below the published expectation of about 150,000 and even further below the “whisper†numbers which were in the 300,000 range. It was especially disappointing given that the ADP report showed almost 300,000 new jobs created earlier in the week.
So What Does it Mean?
The unfriendly report means that we are still waiting for employment to significantly pick up. Don’t let the big drop in the unemployment rate from 9.8% to 9.4% fool you. It was a function of a large swath of people becoming “discouraged†and dropping out of the labor force. The U6 number, which includes discouraged worker rose to 19%, which is very worrisome. This drop in the labor force can be seen in the civilian participation rate, which dropped from 64.5% to 64.3%.
For the entire year of 2010, the economy generated 1.1 million jobs, which seems like great news, but is actually less than the number needed just to absorb new participants into the labor force. We are many years away from simply returning to the pre-crisis levels of employment at this rate. The economy must grow significantly faster for the unemployment rate to drop much.
In my opinion, the most worrisome nugget of the report was the duration of unemployment. This measure the average amount of time a person remains unemployed and it came in at 34.2 weeks, up from 29.3 weeks a year ago. These numbers are much higher than they were in previous recessions, and cause untold economic and social hardships for the people involved.
I wish the report was better for the sakes of those involved and for the economy as a whole. The basic ingredients for job growth are there including an improving economy and corporate America swimming in cash, but hiring on a large scale simply hasn’t happened yet. For the economy to enter its next phase of sustainable growth, it better start soon.
Employment Situation Murkier Than Ever is an article from: 
