Millions Remain Long-Term Unemployed Despite Big Decline in November US Jobless Rate

© AP Photo / Elaine ThompsonIn this Thursday, June 4, 2020 file photo, a customer walks out of a U.S. Post Office branch and under a banner advertising a job opening, in Seattle. The job market took a big step toward healing in May 2020, though plenty of damage remains, as a record level of hiring followed record layoffs in March and April. The Labor Department reported Tuesday, July 7, 2020 that the number of available jobs rose sharply as well, but remained far below pre-pandemic levels.
In this Thursday, June 4, 2020 file photo, a customer walks out of a U.S. Post Office branch and under a banner advertising a job opening, in Seattle. The job market took a big step toward healing in May 2020, though plenty of damage remains, as a record level of hiring followed record layoffs in March and April. The Labor Department reported Tuesday, July 7, 2020 that the number of available jobs rose sharply as well, but remained far below pre-pandemic levels.  - Sputnik International, 1920, 04.12.2021
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The new US jobs report showed an unexpectedly large decrease in unemployment alongside a smaller-than-expected increase in non-farm payroll jobs. Economists say it could mean the US is approaching full employment, meaning interest rate hikes could be on the way. However, longer-term unemployed numbers remained almost unchanged.
New data for November released Friday by the US Department of Labor’s Bureau of Labor Statistics (BLS) showed that just 210,000 jobs were added to the US economy last month, which was the smallest gain since last December, when the United States entered the worst phase of the pandemic thus far.
However, at the same time, some 546,000 people entered the workforce, sending the unemployment rate down from 4.6% to 4.2% - its lowest point since February 2020, the last month before the COVID-19 pandemic began, although still 3.9 million fewer than that time.
Of course, there are also 783,000 fewer people missing from the economy, too, 184,000 of whom were of working age.
Those numbers came as a bit of a shock, since many economists had predicted a much stronger job growth going into the end-of-year holiday season. Dow Jones, for example, estimated that 573,000 jobs would be created and unemployment would only decline by one tenth of a percent, to 4.5%.
However, performance was still better than in October and September, during which the peak of the delta outbreak occurred.
“This report is a tale of two surveys,” Nick Bunker, economic research director at job placement site Indeed, told CNBC. “The household survey shows accelerating employment gains, workers returning to the labor force, and low levels of involuntary part-time work. The payroll survey shows a significant deceleration in job growth, particularly in COVID-affected sectors.”
“The underlying momentum of the labor market is still strong, but this month shows more uncertainty than expected,” he added.
Christopher Rupkey, chief economist at FWDBONDS in New York, told Reuters that observers shouldn’t “be fooled by the measly payroll jobs gain this month because the economy's engines are actually in overdrive as shown by the plunge in joblessness.”
A low unemployment rate traditionally means that wages should soon begin to rise as employers compete for the few remaining unemployed workers. With inflation at its highest rate in 30 years, wages will have to increase just to keep workers at their present levels of consumption.
Indeed, the BLS report showed a modest 0.3% increase in average hourly earnings in November, while the average workweek also slightly increased from 34.7 hours to 34.8 hours. As a result, workers’ paychecks rose by 0.7% - just barely enough to match inflation. The consumer price index report for November hasn’t been released yet, but October’s numbers showed a 0.6% increase in the cost of goods and a larger 6.2% increase over the previous 12 months.
Both trends also mean that it’s almost inevitable that the Federal Reserve will soon increase interest rates, which have been kept low during the pandemic in an attempt to encourage maximum possible job growth at the expense of devaluing the dollar somewhat.
However, a major wildcard is the large number of people without jobs, most of whom aren’t counted as unemployed in BLS statistics.
The BLS report notes that the number of people not in the labor force who currently want a job, the number of people marginally attached to the labor force, and the number of long-term unemployed - the lattermost of whom are counted in the unemployment statistics - have not changed over the last month. Long-term unemployed people, who have been unemployed for 27 weeks or more, still account for 32.1% of all unemployed and total some 2.2 million people.
Those not in the labor force but who want a job are much larger, at 5.9 million in November, and 1.6 million of those have a marginal attachment to the labor force, having looked for a job in the last 12 months but not in the four preceding the BLS survey. Another subset of this category, those discouraged workers who believed there were no jobs available for them, had also barely changed, still totalling 450,000.
People in that category also face more precarity than they did previously, as the Biden administration has allowed federal pandemic-era aid programs to expire, such as the federal eviction and foreclosure moratoria and the added federal unemployment payout, both of which ended in early September.
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