Unemployment falls to 9%. But is this good news?
Another month, another jobs report—but this was a strange one!
According to the Department of Labor, the economy added only 36,000 jobs in January. That puts us just barely in the black and falls way below the number of jobs that need to be added every month just to keep up with population growth, which would be more like 120,000 jobs.
Meanwhile, the headlines you’ll see may focus on the seemingly positive aspect that unemployment dropped to 9% from 9.4%—the lowest rate since April 2009. This looks good on paper, but doesn’t make sense when so few jobs were added. What’s really going on?
- Blame it on the weather. Bad weather all over the country caused fewer jobs in industries like construction and transportation. And storms prevented some employees from getting to work or caused some businesses to close temporarily.
- Some job seekers have given up. The unemployment rate change may just be a result of the fact that fewer people were looking for work. Additionally, the DOL’s adjustment of population numbers may have affected the rate.
- New companies aren’t being counted. The payroll survey (the one that said we added 36,000 jobs) often misses the real number of jobs created because it can only track employers it knows exist. In a real economic recovery, new companies are created, and those wouldn’t be on the department’s radar yet.
The real takeaway: Measuring unemployment is complicated and inexact. This report sends mixed signals, and it’s hard for even the wonkiest experts to say exactly where we’re headed. Luckily, the big picture is that other economic indicators, like the stock market, spending, and consumer confidence, have been looking up lately. Let’s hope that’s where employment numbers are going, too.
Have you seen anything going on in your town that makes you think the job situation is better or worse (i.e. people you know finding work, more people eating out at restaurants, new stores opening)? Share your stories here.