A DISCOURAGING UNDERTONE IN NON-FARM PAYROLLS
A Washington post article called attention to the unemployment situation, the several extensions of unemployment insurance by Congress, and the associated cost to the US government ($10 billion per month, according to the article). Those who have exhausted their 26 weeks of regular unemployment benefits are eligible to receive special emergency benefits under the Emergency Unemployment Compensation 2008 program passed by Congress in mid-2008. As we explain in a previous post, the program has been expanded and extended several times.
As of mid February, there were 11.4 million people collecting unemployment. You may not be able to tell from the graph below, but there are now more people collecting emergency benefits (5.7 million) than the standard continuing claims (5.5 million):
There seemed to be some marginal improvements on this front in the February non-farm payroll release:
- The number of people unemployed 27 weeks or more fell, from 6.3MM to 6.1MM
- The mean duration of unemployment fell as well, if only slightly, from 30.2 to 29.7 weeks
It’s hard to say that the employment situation is improving, though. The headline unemployment rate held steady at 9.7%, but the U6 unemployment rate ticked up from 16.5% to 16.8%. The U6, which includes all marginally attached and underemployed workers, crept higher on the back of an increase in the number of people working part time due to economic reasons (i.e. they wish they could work full time, but can’t find the work). Discouraged workers also spiked in February, as pictured below. These folks are not considered part of the work force even though they want a job. They have stopped looking for a variety of reasons: they think none is to be had, or if there is work then they are untrained for it, or because they are too old or young.
The 139 thousand jump in discouraged workers is large, a 13% month-over-month increase. Not exactly a sign of improvement. We’d like to see a reversal of this trend in the coming months, which would be an encouraging sign for the labor markets.
