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Brooks Wilson's Economics Blog: December’s Unemployment Report

Saturday, January 8, 2011

December’s Unemployment Report

Upon reading a report that job creation did not meet expectations and that unemployment decreased because the number of discouraged workers (workers who are no longer seeking employment) I stopped reading, and refused to listen to the news to protect my optimistic mood.  Instead, I relentlessly prepared for classes that begin on Monday.  Not wanting to learn about an event because it is negative is decidedly unscientific.  

This morning, I decided to resume the role of an economist and read “US jobs report an ‘utter mess’” by Robin Harding of the Financial Times (HT Drudge Report).  I found the report excellent; it contained information on statistical reporting that is often absent.

The monthly Employment Situation report contains two different measures of employment: a survey of employers and a survey of households. Forecasters had expected private job creation would climb toward 200,000.  The survey of employers showed payroll growth of 106,000, hardly an encouraging report.  The survey of households showed that 297,000 more people were employed but that there were 260,000 fewer people in the labor force.  The combination of more employed workers (positive) and fewer labor force participants was mixed news.  The unemployment rate fell from 9.8 to 9.4% November to December but the labor force participation rate fell from 64.5 to 64.3% over the same period.  The conclusion, disappointingly slow growth continues.


  1. Colleen Scott - Macro, 2301/8719/1/11 10:09 AM

    For the past 5-6 years, I have also been following the Unemployment Reports. I spent 4 years working in the staffing industry - from temp, temp to hire, and direct hire. The first few years were some of the best years the company I worked for had (a Franchise owned market, owner of 2 area markets). No lay offs, and a very small percentage of employees on the temp/temp to hire side being fired or let go. All of that changed in mid-2008, when it seemed the entire labor pool had taken a turn for the worse. Lack of ambition, people quitting jobs when their hours were simply cut, an entitled attitude that since they were in a staffing agency they would be placed and therefore lo longer had to look, and people that deliberately bombed interviews to check off one more job search at unemployment, etc. I left the industry shortly after in mid-2009. Not saying every applicant was like this, but the percentage rose to well over 25%. The experience I have had with labor force participants and lack thereof make me the same way in not wanting to even read these reports. I feel the "discouraged workers" description needs to be divided into "true discouraged workers" and "apathatic workers" ... but then I would digress into a political conversation. Needless to say these reports and numbers don't necessarily make me first think anything regarding the economy but rather I think of the attitude of the individuals. Principle 4 - people respond to incentives ... The only incentives I have seen throughout this unemployment rise is extending unemployment, rather than a Return to Work program that may have been more motivation to take the job search seriously or return to school for degrees or vocational training. I know there isn't a silver bullet for any situation like this, but I also know that there are things that could have been done different or implemented to see a better improvement in these numbers by now.

  2. Lori Hodges19/1/11 8:05 PM

    I also think that The principle #4 of "responding to incentives" is even a greater key to unemployment. Many American have been allowed to extend unemployment benefits if they have not found work. If you are experiencing a layoff from a really good paying job, why take a job making less if you can still draw the unemployment for a longer period of time. Where is the earning your wages by the sweat of your brow concept? America offers too many hands-outs. Our society has created a generation of laziness and an unwillingness to be content with living within our means.

  3. Lauren Hall20/1/11 6:43 PM

    I think people who are unemployed do not take their job search too serious because, they do not have to find a job. Instead they can just file for an extention on their unemployment. Therefore, this where principle #4 " People respond to incentives" comes into play. Let's face it a person is most likely not going to take a lower paying job than the one they previously had. So it is probably much easier for them to draw unemployment and get those benefits. I have heard people say they were just fired from their job then, in the same breath say it is ok I will just draw for unemployment and live off of the goverment for awhile.

  4. Piper Wilson20/1/11 9:22 PM

    My husband and I are both unemployed, and I can speak for both of us and say that we do take our job search seriously. Yes, we can take out unemployment (which I have no problem with), but that will be a last resort, if that time ever comes.

    Just to give you some background on us -- we have zero debt (with exception to our mortgage, which is a 15 year that we try to pay extra on), our cars are both payed off, my classes are always paid off before the semester starts (by me -- no financial aid of any kind), and we have money set aside in an MMA, 401K and teacher's retirement accounts for both, and savings account. Our regular account is built up enough to where if emergencies ever come up, we are typically not concerned and are able to cover it. We didn't make a lot in our old jobs, but we just don't live outside of our means.

    When our office suddenly closed, we lost our dream jobs, and we lost working together. Now we are looking for another job where we are just as happy and can work together. The money we have saved up allows for that.

    Does that fit the typical stereotype of someone unemployed who has used unemployment?

    Regardless, we have in fact used unemployment once before, years ago. My husband was on it for about 3 months, and I should say that they strictly monitor your job hunting progress. My husband was required to fill out paperwork telling the office where he was applying, which interviews, the status, etc. My husband got up early every week day to go sit at the unemployment office applying for jobs. What little they gave us wasn't enough to barely live off of, and they only let you have it for so long. Fortunately for us, the cut off date was right before my husband found a job. I'm not even sure how we could have abused the system if we wanted to.

    So yes, some people do find ways (somehow) to abuse the system, but I truly think most people are honest working individuals who are trying to find something that's enough to pay the bills and feed their children.

    As a side note, I see nothing wrong with unemployment getting you through tough times, considering we pay our taxes, and that's what it is there for.

  5. I can relate to what you said about not wanting to watch the news in order to keep my optimistic mood. I used to be a faithful follower of national ans world wide news. Over time, it seemed to grow more and more depressing. Was it because the media began focusing more and more on the negative, or was it because the world is becoming a more hostile place? I'm not sure, but I did notice that I was becoming more heart wrenched every time I tuned in. So I quit watching the news altogether. In recent months, I have heard only bits and pieces of what is going on in the world around me, mostly from the conversations of my friends. I would have to ask question on top of question just to get the back ground story. Needless to say, I have come to the conclusion that it is more responsible to check in on the news of the world from time to time to stay on top of the latest current events. I believe that it is important to know what is, or is not, going on in our world. With that being said, I feel that spending every waking hour pouring over articles and news reports can also be damaging to your morale. It's important to know the facts with out becoming so consumed that it actually effects your daily mood.
    Kim Huffman

  6. Morgan Heeke11/7/11 12:30 AM

    Pride has become an issue with unemployment as well. Many people do not want to take lower paying jobs because they feel like they are worth more. You can always start low and work your way up. Growth of jobs may be slow but this problem isn't going to be fixed overnight. People expect there to be a simple solution to this when in fact, there is no easy answer.