Podcast: The November Unemployment Report and What It Means for the Economy
I’m Michelle Bazie and I’m here with Chad Stone, the Center’s Chief Economist, to discuss the jobs report for November.
1. Today’s employment report was much worse than people were expecting. What happened?
You’re right, Michelle. This was a disappointing jobs report. Payrolls rose by only 36,000 jobs overall in November and the unemployment rate rose from 9.6 percent to 9.8 percent. Private employers have added jobs every month this year, but the addition of 50,000 private sector jobs in November was far less than analysts were expecting. You never want to read too much into a single month’s jobs data, but today’s report is a sobering reminder that the economic recovery remains anemic and it still feels like a bad recession to unemployed workers.
2. Speaking of unemployed workers, Congress let the federal emergency unemployment insurance program lapse this week. What does today’s jobs report say about allowing those benefits to expire?
It says that policymakers don’t have their eye on the ball. In November, 6.2 million people, or nearly 42 percent of the unemployed, had been looking for a job for more than 26 weeks – that’s six months without being able to find a job. Most of them received additional weeks of federal benefits after their 26 weeks of regular unemployment insurance ran out. But now without federal benefits most unemployed workers who can’t find a new job within 26 weeks will have no help tiding their families over. The loss of emergency federal benefits is bad for workers and their families but it’s also bad for the economy.
3. How does that harm the economy?
When a family loses a paycheck it has to cut back substantially on its spending. Unemployment insurance cushions the blow of the lost income and supports a higher level of consumer spending than those families could afford if they were left entirely to their own devices. That means they have more to spend at local businesses, encouraging more economic activity and job creation throughout the economy.
4. Do we have any estimate of how important federal emergency unemployment benefits are for the economy?
We do. A new report from the President’s Council of Economic Advisers estimates that federal emergency unemployment insurance added nearly 800,000 jobs to payroll employment in September – and that failure to continue the program will cost the economy 600,000 jobs by the end of next year.
5. How does November’s unemployment rate compare with the unemployment rate when Congress has ended emergency unemployment insurance in past recessions?
Congress has enacted temporary programs to provide additional weeks of federal unemployment insurance in every major recession since the 1950s. The highest the unemployment rate was when any of these programs ended was 7.2 percent in 1985. The unemployment rate was 9.8 percent in November. 2.6 percentage points higher! 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 a full-time job was 17 percent in November.
6. Chad, what’s the bottom line?
Michelle, job opportunities remain incredibly scarce relative to the number of people looking for work. One of the best ways to create more jobs is to provide another year of federal emergency unemployment insurance, not only to help workers while they look for a job, but also to create more jobs so we can get the economy back on its feet and they can get back to work. Congress needs to extend these benefits now.
Thanks for joining me, Chad.