Great jobs report, but what about the long-term unemployed?February 3, 2012: 10:28 AM ET
The market has every reason to celebrate the latest jobs report, but the statistics on the long-term unemployed are still unsettling.
While the report showed that the economy generated 243,000 jobs in January, it's important to remember the segment of unemployed being left behind. The unemployment rate for January fell to 8.3%, a three-year low that has given the biggest skeptics hope that better days are on the horizon. Stocks and bond yields surged as the U.S. Labor Department report signaled the economy may be weathering Europe's debt crisis. The U.S. economy has been growing now for 10 consecutive quarters, with the latest U.S. manufacturing report showing that the nation is now producing more goods and services than it did before the 2007 downturn.
But all this is happening with six million fewer workers even as the population expands. If we delve into January's labor report a little deeper, prospects for the long-term unemployed (those jobless for six months or longer) didn't improve. The long-term unemployment rate was little changed at 5.5 million workers who account for 42.9% of the unemployed.
A new report by the Pew Charitable Trusts looked at the number of Americans unemployed longer than a year -- it's still higher than than in any previous recession since World War II and it roughly equals the population of Oregon. While the number of workers jobless for a year or longer has fallen after reaching historic highs in the aftermath of the Great Recession, there are still more workers in this group than those who had just been laid off. Specifically, 2.8% versus 1.7% of the total labor force.
This probably isn't too surprising. During the height of the latest recession, employers cut plenty of jobs. Today, the biggest U.S. companies sit on record levels of cash reserves as profits soar. And it's likely that higher-paid older workers probably won't take just any odd job. What's more, gaps in their resume and out-of-date skills might be keeping them from finding work as quickly. Meanwhile, many unable to find full-time jobs are stuck doing part-time work.
What's interesting about the Pew report is the vast differences between the profiles of the unemployed and the long-term unemployed. While the unemployed tended to be younger (workers under age 25) and without a college degree, those jobless for much longer were not only older but spanned across all education levels.
And places where long-term unemployment is highest are along the Pacific, including Alaska, California, Oregon and Washington, where the rate averaged 3.5% at the end of 2011 versus 2.6% nationwide. Southeast states including Florida, Georgia and Virginia weren't much better off at 3.4%.
We can cheer today's promising report, but not without giving attention to those falling behind.