Pethokoukis, Economics, U.S. Economy

A ‘New Normal’ November jobs report: The long emergency for US workers continues

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If the US labor market were back at pre-Great Recession levels, this would have been a pretty decent employment report. Net new jobs were up 203,000 last month with gains broadly based, bringing lower unemployment and underemployment rates. November also saw a nice bump in hours worked, which when combined with an increase in average hourly earnings, points to “a robust advance in wage income,” according to RDQ Economics. The firm also adds, “The evidence from the labor market shows that the momentum in the economy was sustained through the period of the government shutdown.” Good stuff all.

But here’s your trouble:

1. There are still 1.1 million fewer employed Americans today than right before the recession started, despite a potential labor force that’s 14 million larger. And there are 3.6 million fewer full-time workers than back in 2007.

2. The employment rate, the share of Americans with a job, is 58.6% — exactly where it was in November 2009.

3. If the labor force participation rate were where it was a year ago, the jobless rate would be 7.9%, not 7% (and 11.3% if the LFPR were at prerecession levels, though closer to 9% if demographics-adjusted).

4. More than 4 million Americans remain out of work for 27 weeks or longer.

5. Overall, according to the Hamilton Project Jobs Gap calculator, it will take another five years to return to 2007 employment levels even at the improved job creation pace of the past four months.

Things could be worse, of course. If not for the Fed’s bond-buying program, tax hike-driven austerity may well have put the economy back into recession in 2013, sending unemployment back toward 10%. (For more: See the euro zone.) Yet the Long Emergency for workers is still in effect — particularly those who are lightly educated –even as inflation remains moribund. Of course this shouldn’t be surprising given an economy that’s growing around 2% right now.

Here’s hoping 2014 is better, a lot better.

Hamilton Project

Hamilton Project

Follow James Pethokoukis on Twitter at @JimPethokoukis, and AEIdeas at @AEIdeas.

23 thoughts on “A ‘New Normal’ November jobs report: The long emergency for US workers continues

    • By “recessionary austerity” do you mean federal deficit spending in FY 2013 of $680 billion, plus Fed money fabrication of $1 trillion… or $1.68 trillion of economic stimulus, that kind of austerity?

      Like Europe, there’s no real decrease in spending, only an increase in taxes and a continuation of insane borrowing, certain to cause massive future problems.

    • Recessionary austerity?? That a joke right ? If trillion dollar deficits are austerity the earth is a cube, the ice age is upon us, and Obama is an honest man. Now which two of the three have a chance of probability?
      In any case your premise is hoary Keynes, and always with poor Keynes, mangled. Five years my friend, it hasn’t, it won’t work. One uptick doth not a vibrant economy make.

    • Well, what we’ve been doing is taking water from one end of the pool, adding some borrowed water (paper the Fed is buying from Treasury) and then claiming victory when we add the sum to the other end of the pool. Clearly a balanced budget, combined with some corporate tax relief (and some mild discipline in spending) would ameliorate our low growth rate. And higher growth (a la the JFK and Reagan booms) would continue in a victorious cycle, at least for a while.

    • Please explain what you mean by austerity. By my definition it is a reduction in spending. But, what the politicians call austerity (and you seem to be doing so, too) is a reduction in the growth of government spending, not an actual reduction in spending.

      • It’s even worse than that.

        What the politicians are calling ‘austerity’ (here and in Europe) is a reduction in the deficit. That can be had by raising taxes dramatically as you increase spending somehwhat less dramatically.

        And further to propose the budget deficit was ‘reduced’ when you started collecting the payroll taxes you decided to stop collecting is somewhat absurd. Of course you stopped digging the hole you had created.
        The question is, why did we suffer this massive addition of debt when it did nothing to stimulate (the justification for it) economic growth.

    • The austerity applies only to government spending. Reducing government spending is good for the economy. The reductions in unemployment, to 7.0%, has come during austerity.

      The danger is that the sequester gets broken or compromised, which will hurt the economy.

      The money the government doesn’t spend will still be spent, but by the private sector, which will spend the money more wisely.

  1. Things could be worse, of course. If not for the Fed’s bond-buying program, tax hike-driven austerity may well have put the economy back into recession in 2013“…

    Yeah there’s nothing like papering over a country’s debt prolems using monopoly money

    unemployment back toward 10%“…

    Sounds so much better than a U6 rate of 13.8%

  2. Where do you figure in all of the baby-boomers that have been retiring in record numbers over the past 3 years, 10,000 per day which is more that 3.5 million each year for the next 16 years. Will this not effect the employment percentage unlike it ever has over the history of tracking this number?

    • Purely annecdotal info here jarrod since I’m not disputing your numbers in the least but I retired this past August and in the airline business locally I’m one of 360 or so people who have retired in the last two years…

      All of them (or so I’ve been told) but myself have sought out and gotten part time work…

      Now if that is a national trend how will that affect the numbers?

  3. Declining labor force participation rates bad for everybody…onf half of returning vets successfully claim disability…SSDI has ballooned…yet aggregate demand weak…abd the Fed will retreat soon despite no inflation…sad to see

  4. Some here have noted the “demographic adjustment” as the baby-boomers retire.
    So the drop labor force participation is mitigated by the “expected” exits excuse.
    Ok.
    Except those “expected” exits were not “expected” in the sense of fixing the worker-to-retiree ratio crisis, much less ‘funded in a lock-box,” as Al Gore once bellowed.
    Frying pan, meet fire.

  5. Question: “With an unemployment rate of nearly 40%, how are families to pay for Obamacare?” — since we now know that it will not be cheaper by $2500/family as promised, but closer to 2-3+ times higher. How is that affordable? How do you pay for it if you don’t have a job? I guess I don’t understand the new math.

  6. Printing paper money or debasing currency has announced the fall of all empires. When the Roman silver denarius contained only 1% silver, the barbarians took over. When the British pound sterling stopped containing a pound of real silver, their empire died. When the 20 US dollars could be exchanged for an ounce of gold (which today is worth about $1,300 of our paper dollars) the
    United States of America was the leader and defender of the world in the successful fight against the communist mass murderers. This paper dollar in the hands of our politicians is a joke – “backed by full faith and credit”; you must be joking! By the Federal Reserve banks and their printing machines? Sooner than later a loaf of bread here will cost $2,000 of these worthless dollars.
    I was “privileged” to live and work in France when they introduced the New Franc worth 100 old ones; I was on a work assignment in Brazil when their government exchanged 1,000 old cruzeiros into ONE new one.

  7. Yet the Long Emergency for workers is still in effect — particularly those who are lightly educated

    The “excess unemployment rate” (arithmetic difference between less than high school diploma >25 years of age rate and the overall rate) for high school dropouts is following its typical recovery pattern.

    FRED graph

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