EDITOR NOTE: Last week’s November jobs report showed some positive signs. The nation added 245,000 jobs, lowering the unemployment rate to 6.7%. That's the good news. But it didn’t come without a few alarming trends. The rate of job growth is seen to be slowing. The labor force is shrinking. Those who’ve been unemployed for a longer period aren’t finding jobs. And joblessness among minority populations remains high. These negative trends threaten to engulf any step of progress made in the labor market (see chart below). Their overall effects are weighing against the hopes of a near-term economic recovery, adding to the argument for a longer-term economic decline.
The U.S. economy added 245,000 jobs in November and the unemployment rate fell to 6.7%, the Bureau of Labor Statistics said Friday. It’s the seventh consecutive month of improvement from the depths of the Covid recession.
But warning signs are flashing under the surface.
Job growth slowed considerably and the labor force shrunk. The share of workers unemployed more than six months is fast approaching its historical peak. More than 1 in 10 Black workers remain unemployed.
These are concerning trends, economists said, especially as a surge in Covid cases, hospitalizations and deaths has led some officials to reimpose regional shutdown measures. The cold winter months threaten to further dampen economic activity as jobless benefits for millions are poised to expire at year’s end.
“It feels weird to say a report that shows 245,000 jobs added and a 0.2-point drop in the unemployment rate is worrying,” said Daniel Zhao, an economist at job and recruiting site Glassdoor. ”[But] this feels like the calm before the storm.”
Decelerating job growth is perhaps the most alarming signal in the November report, economists said.
Last month’s bounce is well short of the rebound in May and June, when businesses added 2.7 million and 4.8 million jobs to their payrolls, respectively. It also fell short of the 610,000 jobs added in October.
“There’s no way to sugarcoat today’s weak jobs report,” said Robert Frick, an economist at Navy Federal Credit Union. “Last year, monthly gains were about 200,000, so we are far below a good pace to return the almost 10 million jobless Americans back to work.”
At November’s rate of growth, the U.S. wouldn’t recover its pre-pandemic employment levels for another four years, Zhao said.
The *entire* progress in labor markets since the April low has been a redn in unemployed on temporary layoff as people went back to their old jobs. Unemployed not on temporary layoff has risen. This will be a headwind for further progress on the 11m jobs short of trend. pic.twitter.com/Y1G0I3NMKK
— Jason Furman (@jasonfurman) December 4, 2020
Future job gains may be tougher, economists said, since many of the workers laid off on a temporary (rather than permanent) basis in the spring have already been rehired.
Of course, widespread distribution of a Covid vaccine may lead to a quick rebound in economic activity — and jobs along with it.
The share of unemployed workers who have been jobless for more than six months is fast approaching a historical record.
In November, the number of workers jobless for at least 27 weeks — economists’ barometer for “long-term” unemployment — grew by 385,000 to 3.9 million.
That accounts for 37% of all unemployed workers — up from a third in October and 19% in September. Long-term joblessness peaked above 45% in April 2010, in the aftermath of the Great Recession.
But this is a dangerous financial period. For one, it’s tougher to find a job the longer someone is unemployed. Workers also generally exhaust their state unemployment benefits after six months.
Federal extensions offering additional weeks of benefits will end the last weekend in December absent congressional action. Almost 4.6 million workers were relying on those extensions in November, according to the Labor Department.
Originally posted on CNBC