U.S. Economy Adds 200,000 Jobs In December As Jobless Rate Falls To 8.5 Percent
After months of reports suggesting that the U.S. labor market might never change, the latest jobs picture is giving Americans something they haven't had for some time: a reason to hope.
In December, the U.S. added 200,000 jobs -- beating economists' expectations -- while the unemployment rate dipped to 8.5 percent, the government reported on Friday.
Although part of the drop in the unemployment rate came from some 50,000 Americans leaving the labor force -- once a person gives up looking for work, they are no longer counted as unemployed -- most of it came from real progress: more jobs. And while many economists say that 300 or 400 thousand jobs per month, month after month, are needed to dig America out of the massive jobs hole the recession created, on Friday morning, labor market watchers were celebrating.
"I think it's a very positive report, unambiguously," said Mark Zandi, Chief Economist of Moody's Analytics. "Generally you have a lot of cross currents, but this suggests that the job market and the economy are gaining broader traction."
Average hourly earnings also rose by 4 cents, while the average workweek ticked up by .1 hours to 34.4.
"I thought the numbers were pretty darn good," said Stuart Hoffman, chief economist for The PNC Financial Services Group. Hoffman sees this report as the resumption of a trend in growth that began at the beginning of last year, but flattened out over the summer, slowed by rising oil prices, uncertainty in Washington, the tsunami in Japan and other threatening global forces.
"All of these new signs send the same positive signal about a real improvement." Hoffman said.
Job gains came in retail, a steady winner in the post-recession days, along with manufacturing, mining, health care and leisure and hospitality. Government employment, which shed 280,000 positions over the past year, slowed its losses to 12,000 fewer positions in December.
If there is one dark spot, it is the continued decline of the labor force -- which has been an increasing worry throughout the post-recession days.
Plus, there are still over five and a half million Americans who have been out of work for six months or more -- some 42.5 percent of all unemployed. Of those, 1.9 million have been out of a job for 99 weeks or longer. And for those folks, such signs of improvement may not translate to new hope.
And these figures don't even capture the complete picture, some economists say. While long-term unemployment rates have been stuck at record highs for two years, the government numbers don't tell the full story of those suffering in the labor market. In order to be counted as officially long-term unemployed, a person must be out of a job for 6 consecutive months and consistently looking for work.
In a new paper co-authored by John Schmitt, a senior economist at the Center for Economic and Policy Research, he examines a definition of long-term unemployment that casts a wider net to include not just those who can't find work, but also those who can only find part-time work, have given up looking, or have finally found something steady but the work just isn't good. He calls it "long-term hardship."
"Let's say you were a long-term unemployed steel worker from Ohio and you buckled under and said, 'Okay, I'm going to work for Walmart for 9 dollars an hour' -- have your problems been solved?" Schmitt said. "Are you no longer experiencing hardship in the labor market?"
By Schmitt's count, from 2007 to 2010, the number of unofficially long-term unemployed increased by almost as much those who were officially out of a job by the government's count. (2.0 percentage points of the working-age population versus 2.5 percentage points).
"The government's count of the long-term unemployed is important, but it hides almost as much as it reveals," Schmitt said. Schmitt sees very little on the horizon to ease the suffering of long-term hardship.
For those workers, who have likely seen their skills and savings erode over the last few years, getting back into the labor market will prove ever-more difficult, particularly if job creation keeps chugging along around 150 or 200 thousand jobs a month. The new jobs, research shows, will probably go to the freshly unemployed.
This is a reality that Hazel Feldman is all too familiar with. Feldman is 58 and living in New York City. She has a masters degree in social work from Hunter College and a B.A. from Fordham University, and a long career as a social worker behind her. But besides a little bit of off-the-books childcare, she's been unable to find work since August 2008.
She's still looking, but she's given up hoping she'll ever find anything.
"It just goes on and on and on because there are no jobs," Feldman said. She is nearly out of her small pool of savings and lives very frugally, walking all over the city to save the subway fare.
"It's not getting better, so it's getting worse," she said.
Arthur Delaney contributed to this reporting.
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First Posted: 01/06/12 08:32 AM ET Updated: 01/07/12 09:35 AM ET