As recently as yesterday, economists and analysts were reasonably hopeful that the labor market had entered a period of self-sustaining recovery. Today’s jobs report takes a sledgehammer to those hopes.
The year ended with a roar of disappointment. The economy added only 74,000 jobs last month. While the unemployment rate fell to 6.7%, the drop was driven by a contraction in the labor force of 347,000. It’s important never to make too big a deal out of one month’s report, but there is no hiding the fact that the labor market’s performance in December was very disappointing.
Though we didn’t need today’s report to reach these conclusions, what we learned this morning about December’s labor market highlights the need to extend federal unemployment benefits and to enact policies to help the labor market recover.
The end of the year also provides an opportunity to step back and survey the recovery from 30,000 feet.
How does it look? Over the last few years, we have had very-steady-but-too-slow monthly payroll gains.
The share of the working-age population with jobs has been depressingly constant and much too low.
The unemployment rate has dropped, but…
…so has labor force participation.
And don’t forget that 3.9 million workers have been looking for work but unable to find a job for six months or longer — the long-term unemployed. They’re 2.5% of the labor force.
I have written many times that long-term unemployment is the most immediate social and economic problem facing the country today. Here’s hoping that by the time the December 2014 jobs report is released the federal government will have taken steps to address it.
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