Three reasons why the job market still stinks

The unemployment rate fell to 8.6% in November, but there's not much to celebrate.

FORTUNE – Amid the gloomy outlook that Europe's ongoing debt crisis has cast over the world, today's report on the state of the U.S. jobs market might come as a welcoming sign that the economy is on firmer footing.

In November, the unemployment rate fell to 8.6% after hovering at around 9% for most of 2011, the U.S. Labor Department reported. Private employers continued adding jobs at a healthy pace, while the unemployment rate fell to its lowest level since March 2009. Nonfarm payrolls rose by 120,000, with private companies adding 140,000 jobs.

This might sound like good news, given that European officials don't seem anywhere close to a meaningful remedy for Europe's debt problems. But, while it might seem like the U.S. (at least for the moment) is shrugging off problems of the euro zone, all is far from well. If you're reading the government's report and still aren't convinced your jobless plight is getting better, here are three possible reasons why:

The jobless have quit their job search.

The unemployment rate doesn't measure the percentage of the population with a job, it just measures the number of job seekers. As a result, many people who have been unemployed for a while and who have given up looking for work aren't factored into the rate. Indeed, November's jobless rate fell partly because more workers got jobs, but it also fell because about 315,000 workers dropped out of the labor force. Even worse, the more than 13 million unemployed have, on average, been jobless for 40.9 weeks – an all-time high.

"It is likely that many long-term unemployed workers are dropping out as their unemployment insurance benefits expire," according to a report by Moody's Analytics. "Many of these workers will likely stay out of the job market permanently."

Those who do find jobs aren't financially better off.

As New York Times' Motoko Rich points out, a new Rutgers University study shows that only 7% of those who lost jobs after the financial crisis have returned to or improved upon their previous financial position and lifestyle. The vast majority in the study's survey say that have diminished lifestyles, with about 15% saying they have seen drastic reductions in their incomes.

And those with less education saw more job losses during the downturn. Even those who landed a job made significantly less than before the Great Recession.

Government workers are getting the boot.

Employees of local and state governments probably have the least reason to celebrate. Whichever direction the unemployment rate moves seems almost irrelevant for them, as governments grapple to close budget gaps and shed workers. In November, the downward trend continued as the public sector lost 20,000 jobs – 5,000 of which came from the U.S. Postal Service.