Budget Background

Dec 02 2011

The November Jobs Report: A Closer Look

More Americans Out Of Work; Weaker Growth Ahead

  • The total number of people without jobs is 13.3 million. Additionally, 2.5 million people wanted and were available for work—more than this time last year—but were not included in the overall unemployment rate.
  • The unemployment rate dropped from 9.0 percent to 8.6 percent, but 315,000 Americans left the labor force.
    • This means that the percentage of Americans unemployed dropped because fewer were looking for jobs, thus exaggerating the trend downward.
    • Had labor force participation remained steady, the jobless rate would have dropped to 8.8 percent, according to Citigroup calculations. If the labor force had followed trend growth, unemployment would be at 8.9 percent.
  • 120,000 non-farm jobs is weaker—and more temporary—than hoped.
    • This is less than the 125,000 that most economists predicted.
    • 50,000 of the new private sector jobs are retail and related to the holiday season, thus primarily temporary.
    • Since President Obama took office, the economy has lost more than 2 million jobs.  More than half of those job losses have been in manufacturing.
  • The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 43 percent from 42.4 percent.
  • The jobless rate has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948.
  • The labor participation rate now stands at 64 percent, down from 64.2 percent last month.  Since the president has taken office, the labor force participation rate has dropped almost two percentage points, one of the largest three-year drops on record. The labor force participation rate has not been this low since January 1984.
  • The number of discouraged workers—those who are not in the labor force but want a job— increased by 129,000 to 1.1 million.
  • At this pace of job growth, it will be more than two decades before we get back down to the pre-recession unemployment rate. “Moreover, a shrinking labor force is not the way we want to see unemployment drop,” said Heidi Shierholz, economist at the Economic Policy Institute.

Looking ahead…

  • In the long run, CBO projects that President Obama’s stimulus will reduce the size of our economy.
    • “In contrast to its positive near-term macroeconomic effects, ARRA will reduce output slightly in the long run, CBO estimates—by between zero and 0.2 percent after 2016.”
    • “To the extent that people hold their wealth in government securities rather than in a form that can be used to finance private investment, the increased debt tends to reduce the stock of productive private capital.”
    • “Over the long term, the output of the economy depends on the stock of productive capital, the supply of labor, and productivity. The less productive capital there is as a result of lower private investment, the smaller will be the nation’s output over the long run.”