Today's strong jobs report shows continuing labor-market improvement but also continuing significant "slack" -- people who are not working but want to be, or people who want to work full-time but can only find part-time jobs. Prominent among those struggling to find work are the roughly three in 10 jobless workers who've been looking for a job for 27 weeks or longer (see chart).
These workers no longer receive unemployment insurance (UI) benefits, since most states offer 26 or fewer weeks of regular state UI and the emergency federal program enacted in the Great Recession to provide additional weeks expired at the end of 2013. The 2.8 million long-term unemployed are still actively looking for work and, thus, are counted as part of the labor force. Numerous others would like a job -- and would likely have one in a more robust labor market -- but they're not in the labor force because they think they have scant prospects of finding work.
To be sure, labor markets are much stronger than in October 2009, when unemployment peaked at 10 percent. Nevertheless, January's 5.7-percent unemployment rate is still 0.7 percentage points higher than at the start of the recession in December 2007.
More significantly, the long-term unemployment rate is 0.9-percent higher than when the recession began; the Labor Department's most comprehensive alternative unemployment rate measure, which includes not only the unemployed but also people who want to work but are not currently looking and people who are working part-time because they can't find full-time work, is 2.5 percentage points higher than when the recession began, and the employment-population ratio, or the share of the population aged 16 and over with a job, is 3.4 percentage points lower than when the recession began. The aging of the population is one reason for that last figure, but the employment-population ratio for prime-age workers (aged 25 to 54) is itself 2.5 percentage points lower than at the start of the recession.
Ongoing labor-market slack is particularly hard on the long-term unemployed, whose skills tend to erode while they remain jobless and who often seem stigmatized for being out of work so long when they apply for a job. It's unfortunate that federal UI benefits for the long-term unemployed expired at the end of 2013; it's even more unfortunate that, in recent years, several states have made it harder for people who lose their job through no fault of their own to qualify for any UI, and eight states have cut the maximum number of weeks of UI they provide below the customary 26 weeks.
President Obama has acknowledged these problems by including a set of major UI proposals in his new budget request that would both shore up UI financing for the long term and reform the federal Extended Benefits program to make additional weeks of UI available automatically in states with high or rapidly rising unemployment rates. The proposal also would provide incentives for states to offer a maximum of at least 26 weeks of benefits. Twelve states and the District of Columbia currently have unemployment rates of at least 6.5 percent, which, under the proposed reforms, would give the long-term unemployed in those states an additional 13 weeks of federal emergency benefits if they exhaust their state benefits before finding a job.
About the January Jobs Report
Employers reported strong payroll job growth in January. In the separate household survey, the unemployment rate edged up to 5.7 percent, but that reflected strong growth in labor-force participation rather than a worsening job market.
Interpretation of today's report is complicated by a number of technical changes to the data. The Bureau of Labor Statistics (BLS) has revised historical payroll employment data from April 2013 forward to reflect the annual benchmark adjustment for March 2014 and has revised its seasonal adjustment of data further back. Also, unemployment and other household survey data for January 2015 reflect updated population estimates and are not directly comparable to earlier data, which BLS has not revised to incorporate those estimates.
- Private and government payrolls combined rose by 257,000 jobs in January, and BLS revised job growth in the previous two months upward by a total of 147,000 jobs (some of that due to the annual benchmark adjustment). Private employers added 267,000 jobs in January, while overall government employment fell by 10,000. Federal government employment fell by 6,000, state government by 3,000, and local government by 1,000.