Podcast: The December Employment Report and What It Means for the Economy
I’m Michelle Bazie. Today, the Labor Department issued employment data for the month of December. We’re here with Chad Stone, the Center’s Chief Economist to discuss the numbers.
1. Chad, what do the new numbers tell us about whether the recession is over?
A: The unemployment rate stood at 10 percent in December, unchanged from last month and 85,000 jobs were lost. Even though high unemployment and job losses are the most obvious indicators of a recession to most people, economists weigh a number of other factors as well in identifying when the economy moves from recession into recovery. In fact, it is common for improvements in the labor market to lag behind increases in new orders and sales in the early stages of a recovery.
2. So what accounts for that lag?
Employers want to be sure their business is really picking up before they are confident enough to start hiring more workers. So, while the recession that began in December 2007 likely ended sometime this summer, and large monthly job losses and sharply rising unemployment may be behind us, the labor market remains extraordinarily weak and jobs remain very hard to find.
3. How does the unemployment rate compare to the previous two recessions?
A: The rate has risen far higher than in the previous two recessions in 1990-91 and 2001. The unemployment rate has increased more sharply than it did in the deep 1981-82 recession but not to the 10.8 percent rate reached in the depths of that recession.
4. What does this mean for job seekers?
A: It’s very hard to find a job right now and it is likely to continue to be hard for some time to come. In many ways the official unemployment rate understates the weakness of the job market. The Labor Department’s most comprehensive alternative measure of unemployment — which includes people who want to work but are discouraged from looking and people working part time because they can’t find full-time jobs — that measure edged up to 17.3 percent in December – the highest figure on record in data that go back to 1994. Forty percent of the unemployed have been looking for work for 27 weeks or longer, and the percentages of long-term unemployed reached in this recession are the highest on record in data that go back to 1948. That 27 weeks or longer number is significant because regular unemployment insurance benefits typically run out after 26 weeks.
5. What should Congress do in these circumstances?
The case remains strong for Congress to renew the additional weeks of temporary unemployment insurance and other assistance for unemployed workers scheduled to expire at the end of February and to provide additional federal fiscal assistance to states in order to help maintain vital public services and reduce layoffs of teachers, firefighters, and police officers. These measures are highly effective at boosting economic activity and encouraging faster job creation and a stronger economic recovery.
Thank you for joining me, Chad.