New Unemployment Figures Nothing To Celebrate

On Friday the Labor Department released its latest unemployment figures.   They reported that 103,000 jobs had been created in December and the unemployment rate had fallen from 9.8% to 9.4%.   Some economic pundits, and indeed even President Obama, are trying to paint these new figures as indicative of an improving job situation.   They point out that we've had 12 months in a row of positive job growth.

While that is true, it's been a very anemic job growth.   While 1.1 million jobs were created in 2010 (an average of 91,666 jobs a month), that is not even enough jobs to cover the new people entering the job market.   Most economists believe between 1.2 and 1.5 million jobs must be created each year just to keep pace with new entrants into the job market.   So what really happened is that this country fell a little further behind last year as far as jobs are concerned.

This poses the question -- if we fell further behind in joblessness last year, how did the unemployment number fall?   To understand that you have to understand the faulty way the government figures the unemployment number.   They don't really try to count the total number of people unemployed -- only the ones receiving jobless benefits or actively seeking work through government and private employment services.   They don't count the large number of people so frustrated they have given up trying to find a job.

Before December, the best guess of the number who have given up trying to find work was at least 1.3 million people.   Since the job creation number for December was not quite enough to keep up with new entrants to the work force, that means the 0.4% drop in unemployment means that at least that many more people gave up trying to find work in December.   In fact, the Labor Department admits this is most likely what happened.

Most politicians are trying to convince Americans that the joblessness can be cured quickly, but that is just not the truth.   Federal Reserve chairman Ben Bernanke has been quoted as saying it could take four to five years to get the unemployment rate back down to under 6%.   I think he is being very optimistic in that estimate.   For that to be true, the economy would have to create 335,000 jobs for every single month for a four year period, and we are nowhere near that happening.

The truth is that when you add those who have given up into the unemployment figures, and those working part-time because they can't find full-time work, the real unemployment figure is probably about 18-19% -- getting very close to the figures of the Great Depression.   And with the outsourcing of jobs continuing unabated, and a return to Republican "trickle down" economic theory, there is no reason at all to think the jobless numbers will improve anytime soon.

In short, there's no reason to celebrate the new unemployment numbers.   It just shows the recession continues to hurt millions of Americans.