http://www.businessweek.com/news/2010-01-09/shrinking-u-s-labor-force-keeps-unemployment-rate-from-rising.htmlShrinking U.S. Labor Force Keeps Unemployment Rate From Rising
January 09, 2010, 12:22
By Bob Willis and Courtney Schlisserman
Jan. 9 (Bloomberg) -- An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said.
Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.
“The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged.
About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- rose to 17.3 percent in December from 17.2 percent.
The number of discouraged workers, those not looking for work because they believe none is available, climbed to 929,000 last month, the most since records began in 1994.
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http://www.wsws.org/articles/2010/jan2010/jobs-j09.shtml<edit>
The Obama administration met the latest US jobs report with scarcely concealed indifference. President Obama counseled that the “the road to recovery is never straight” but that the economy “is still pointing in the right direction,” as he announced a measure that would hand over $2.3 billion in tax credits to manufacturers to put in place “green technologies.” These would fund 180 projects and would create a grand total of 17,000 jobs, according to the administration.
Christina Romer, Obama’s chair of the Council of Economic Advisers, called the December job losses a “slight setback” when “compared with the unexpectedly good report for November.” Romer added that the report “underscores the need for responsible actions to jump-start private-sector job creation.” Romer’s references to “responsible actions” and “private-sector job creation” serve notice that the administration is not contemplating any new government stimulus or public works program.
All indications are that for America’s workers, 2010 will be even worse than 2009.
The Labor Department report confirmed the consensus view that the official unemployment rate in 2010 will remain close to, or above, 10 percent. Even should job growth occur, it would have the effect of driving up the official unemployment rate by drawing back into the hunt for jobs, and thus into the official workforce, “discouraged workers” who had given up looking.
To reverse the unemployment rate, economic growth would have to be more rapid than the 4 percent gross domestic product increase predicted by many economists for the fourth quarter of 2009, and the economy would have to add well over the 100,000 to 150,000 new jobs monthly necessary to keep pace with population growth.
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