Jobless Rate Falls, But Job Creation Falls Short of What Nation Needs

Image: Mike HallThe new year started with better but not great news on the jobs front. The latest figures from the U.S. Department of Labor released this morning show that unemployment dropped from 9.8 percent in November to 9.4 percent in December.

Even with the expected holiday season hires, only 103,000 net new jobs were created last month. Economists had predicted 150,000 to 175,000 new jobs for December. The number of jobs created is a drop from November, when 151,000 jobs were added.

The jobless rate has been at 9 percent or more for the past 20 months—the longest it has been this high since World War II, according to the Economic Policy Institute (EPI).

Economic Policy Institute (EPI) economist Heidi Shierholz says the drop in the unemployment rate is somewhat misleading. 

Around half of the improvement was due to 260,000 people dropping out of the labor force, leaving the labor force participation rate at 64.3 percent, a stunning new low for the recession. Incredibly, the U.S. labor force is now smaller than it was before the recession started, though it should have grown by over 4 million workers to keep up with working-age population growth over this period.


According to the report, 14.5 million are officially jobless, down by 556,000 from last month. Long-term joblessness did not change from last month, with 6.5 million workers jobless for six months or more. That represents 44.3 percent of all unemployed workers.

The economy needs to add about 150,000 new jobs each month to keep up with the growth in the labor force. But to lower the nation’s unemployment rate to 6 percent by 2013 and make up for the more than 8 million jobs lost due to the Bush recession, the economy needs to add 350,000 jobs a month.

The nation is in dire need of a battle plan to create jobs and revive the economy. But instead of tackling job creation out of the gate, the new Republican majority in the House is playing cheap partisan politics by devoting its first week of action to repealing health care reform.

AFL-CIO President Richard Trumka says that while the drop in December’s unemployment rate is welcome news, “net job growth is still not enough to accommodate our growing population, let alone close the 11-million job gap left by the Bush recession.”

The cuts being proposed by Republicans in Washington and around the country, including undermining Social Security and Medicare and cutting transportation spending, are the wrong remedies at the wrong time and threaten our economic future. We need dramatic action to invest in America and give states and cities breathing room to prevent further layoffs and create jobs.

Manufacturing gained 10,000 jobs in December, contributing to a gain of more than 100,000 jobs since December 2009. Construction jobs fell by 13,000, while retail jobs increased slightly by 12,000. But that follows November’s loss of 28,000 retail jobs. State and local public employee jobs fell by 20,000 last month.

The health care and leisure/hospitality sectors continue to be the strongest areas of job growth, with leisure/hospitality jobs increasing by 47,000 and health care employment expanding by 36,000 in December.

Earlier this week, Michael Snyder took a dispiriting look at how working families have been battered in recent years, especially with vanishing middle-class jobs and blue-collar jobs that pay decent wages. These jobs vanished in large part because of Bush-era trade and economic policies that encouraged U.S. firms to export jobs and gave Wall Street and Big Banks free rein to recklessly ride the economy off a cliff.  Snyder writes:

More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the recession began in December 2007.

Since the year 2000, we have lost 10 percent of our middle-class jobs. In the year 2000, there were about 72 million middle-class jobs in the United States but today there are only about 65 million middle-class jobs. Meanwhile, our population is getting larger.

One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.

Income inequality continued to grow with the richest 20 percent of working families taking home 47 percent of all income and earning 10 times that of low-income working families.

This article was originally published on AFL-CIO Now Blog.

About The Author: Mike Hall is a former West Virginia newspaper reporter, staff writer for the United Mine Workers Journal and managing editor of the Seafarers Log. He came to the AFL- CIO in 1989 and have written for several federation publications, focusing on legislation and politics, especially grassroots mobilization and workplace safety.

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Madeline Messa

Madeline Messa is a 3L at Syracuse University College of Law. She graduated from Penn State with a degree in journalism. With her legal research and writing for Workplace Fairness, she strives to equip people with the information they need to be their own best advocate.