Good News for the Long-Term Unemployed in a Strange Jobs Report

The headline numbers from this mornings job report are +113,000 jobs and a slight decrease in unemployment from 6.7% to 6.6%. Unfortunately, +113,000 jobs is less than the +190,000 expected, and also isn’t enough to reduce unemployment. Usually this means unemployment went down because people stopped looking for work. However, that’s not the case this month, the civilian labor force rose by 499,000, which pushed the labor-force participation rate up, meaning more people started looking for work than stopped.

The simple truth is the numbers don’t match up. The 113,000 jobs comes from a survey of businesses, and the unemployment rate is generated by a survey of households. The household survey shows 616,000 new jobs as well as a large reduction in people who were stuck in part-time jobs but wanted to work full-time (-514,000). In other words, we have a wildly optimistic household survey and a mildly pessimistic establishment survey. So what does it mean?

Usually the household survey is noisier (i.e. the numbers bounce around more) than the establishment survey. Remember that all surveys have a margin of error, and both the household survey and the establishment survey usually get substantially revised after their initial release. As part of this report November was revised up from 241,000 to 274,000 and December had an unusually small revision moving from 74,000 to 75,000. My guess is that eventually we will find January is doing roughly what the economy has been doing for the past 3 years, generating about 190,000 jobs per month, which is approximately enough to get us to full employment in 2020 or so. In other words, the economy is still improving, but is unacceptably slow for the 10.2 million people who remain unemployed and the 3.6 million long-term unemployed.

The report did contain good news for the long-term unemployed, with long-term unemployment down 232,000 since last month and down 1.1 million since last January.

longterm unemployed


The percentage of unemployed who are long-term unemployed has followed a similar pattern:

percent longterm unemployed


We won’t know for a while how to really reconcile the household survey and the establishment (business) survey, but for now this looks like a continuation of slow job growth, but some rather encouraging news for the long-term unemployed. Long-term unemployment is particularly important both because of the high financial, social, and psychological costs of unemployment and because the longer an individual is unemployed the less likely they are to be able to find quality employment again. Pushing down long-term unemployment should be a top priority for policymakers and advocates.


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