Despite a report released by the Bureau of Labor statistics showing that unemployment fell to 7% in November, from 7.3% in October and that employment increased by 203,000, a study carried out at the Economic Policy Institute says the US labor market remains weak.
In order to get back to pre-recession levels, the economy needs to add 7.9 million jobs.
Elise Gould carried out an analysis where she finds that the overall trend shows the US labor market remains weak. For example, the public sector is still missing 1.47 million jobs with the government shutdown over.
“The talk about the effects of the October government shutdown on public-sector employment is largely a distraction from the larger issue, namely just how many jobs the economy needs to create to return to pre-recession levels of public-sector employment. In addition to the economic ramifications of the 800,000 furloughed government employees in October, we still face a sizable jobs shortfall in public-sector employment.”
US labor market remains weak as long-term unemployment rises
The number of long-term unemployed has risen, Gould points out. Emergency unemployment benefits are set to expire and should be extended, she adds.
“Today, the long-term unemployment rate is more than double the average rate in 2007. Federal unemployment insurance benefit extensions are set to expire at the end of this month. It would be unprecedented for unemployment insurance benefits to expire at a time when the long-term unemployment rate remains so elevated.”
There are about 5.7 million potential employees who remain sidelines; people who are not in jobs and are not seeking employment.
However, if job prospects were significantly stronger they would either be working or looking for jobs.
The unemployment rate would be 10.3% and not 7% if they were counted as jobless workers.
These trends, together with the fact that elevated unemployment levels cut across all demographic groups and occupations, are evidence that while November’s figures provide some hope, this is not a time for Congress to carry on with its spending cuts or for the Federal reserve to start tightening the fiscal reins.