How far have we fallen during this never-ending economic slump? A drop in the unemployment rate isn’t necessarily good news.
Nevada’s unemployment rate for November was 13 percent, down from 13.4 percent in October and 14.9 percent a year ago. Nationally, the jobless rate was 8.6 percent in November, down from 9 percent in October and 9.8 percent a year ago.
If the unemployment rate only reflected growth in America’s payrolls, perhaps economists would be signaling a full recovery is in sight. In fact, the unemployment rate measures how many people have jobs against how many people are actively looking for work. If you stop searching for a job, the government no longer considers you unemployed.
Bill Anderson, chief economist of the Nevada Department of Employment, Training and Rehabilitation, said that if you include in the jobless calculation those who’ve given up finding work and the many thousands of underemployed, part-time employees who’d rather have full-time positions, the state’s average unemployment rate this year is 23.3 percent.
Nationally, the Financial Times’ Ed Luce points out that “if the same number of people were seeking work today as in 2007, the jobless rate would be 11 percent.” Even as the country’s population continues to grow, the percentage of U.S. residents who either have a job or are actively looking for one has dropped from 62.7 percent to 58.5 percent. In November alone, almost 500,000 people dropped out of the labor force. Factoring in the discouraged and the underemployed lifts the national jobless rate to nearly 20 percent.
Jobless benefits, which can last up to two years, provide some of the long-term unemployed with an incentive to remain on the sidelines. A steady increase in the unemployment rate might not be a bad sign if it means discouraged job seekers see a reason to start looking for work again. Congress certainly could help by enacting permanent, low tax rates and dialing back Washington’s deficit spending to ease the uncertainty businesses are struggling to manage.
Nevada’s labor force actually grew by 1,200 workers from October to November, meaning more people were looking for work and finding it for the holiday season.
Maybe there really is a Santa Claus.