Unemployment Rate Drops Unexpectedly. Time to Celebrate? Nope.
By Nancy Cook
The national unemployment rate dropped this morning from 10 percent to 9.7 percent. That’s good news, right?
Well, some aspects of the new data are cause for optimism. The federal government, health care, retail, and temporary services continued to add jobs in January. The average workweek for employees increased to 33.9 hours, and as David Leonhardt at The New York Times wisely points out, the economy lost an average of 35,000 jobs over the last three months—a decrease from the previous average of 700,000 job losses per month in the spring of 2009.
So why aren’t we celebrating? The unemployment rate remains awful for men (10 percent), teenagers (26.4 percent), African-Americans (16.5 percent), and Hispanics (12.6 percent). The number of people who have been unemployed for 27 weeks or more has increased to 6.3 million, and in January, 1.1 million workers just stopped looking for work, compared with the 409,000 people who found themselves in this situation one year ago.
The results are mixed, in part, because the unemployment data are confusing. The unemployment rate dropped to 9.7 percentbut, at the same time, the economy lost 20,000 jobs. What? This discrepancy happens because the BLS is based on the results from two different surveys: the Current Population Survey and the Current Employment Statistics, according to the blog Calculated Risk. NPR’s Planet Money has a good explainer of it here.
It’s also hard to know how to feel about this slight drop in unemployment because, over time, the rate has remained so persistently high. Economists keep telling us the economy is rebounding and the big banks are busy handing out billions of dollars in bonuses, but most Americans in their day-to-day lives know friends and neighbors who are un- or underemployed, and even those lucky enough to find work still suffer from job insecurity and stagnant wages.
There’s no guarantee that the unemployment rate will continue to drop. For this to happen, Leonhardt points out, the economy would have to add 150,000 jobs per month. That’s a tall order, even if the Senate manages to pass a jobs bill next week. More likely, economists predict the unemployment rate will rise again—most likely, as The Wall Street Journal points out, into the double digits.
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Nancy Cook is a staff writer for Newsweek and Newsweek.com, covering business and economics. In 2010, she and a team of two editors won the New York Press Club Award for Best Business Reporting on the Internet for their seven-month multimedia project called “Jobbed: How America Works Now,” which examined the future of work, careers and the labor market as the country emerged from the recession.
Cook has written about the way the stimulus money affected a single neighborhood to luxury retailers thrilled by record Wall Street bonuses to accounts of rank-and-file employees whose careers were turned upside down by Lehman Brothers’ collapse. She also has reported on politics and economic policy for Newsweek.com’s national affairs blog, focusing on the intersection between Washington D.C. and Wall Street.
Prior to coming to Newsweek, she worked as a producer on the 2008 presidential campaign at National Public Radio and as an on-air reporter for WRNI, the Rhode Island NPR affiliate. There, her enterprise and feature reporting on a lackluster urban school system and a federal lawsuit against the state child welfare agency earned her two regional Associated Press awards. She graduated from Carleton College and Columbia Graduate School of Journalism, where she now teaches as an adjunct professor.
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