Saturday, February 2, 2013

More Jobs and More Unemployed: What happened?

Thanks to the retail, wholesale, health and construction sectors, 157,000 jobs were added last month to the economy- a 22,332 increase from December. The unemployment rate rose .10 percentage point, to 7.9 percent, and has been holding steady at that level since September of last year. As for distinct demographic groups, there was no significant change in unemployment rate over the same period, although teens held the top spot at 23.4 percent and blacks came in second at 13.8 percent.

So, the first question that popped into my mind was: why has the unemployment rate held steady when more jobs have been added?  Turns out there were several reasons.

First, more people have been looking for work the past year, 1.6 million in fact. Until they can actually find work, the unemployment rate will be slightly fluctuating around that 7.9 margin, give or take. At an estimated 125,000 growth in jobs per month, there are just enough jobs to sustain this new workforce, which means the chances of the unemployed finding a job are slim to none.

Second, our politicians have been too focused on haggling over the fiscal cliff - which they narrowly avoided - and the deficit and have naturally been diverted from trying to create jobs. Sort of. Job growth has been a top priority for some time, but our leaders just can't come to a consensus as to the best strategy. As I mentioned yesterday, many jobs have been spared under the Middle Class Tax Relief and Job Creation Act that passed last February, which has prevented the unemployment rate from rising further.

Keep in mind, that the slight change in unemployment rate is a short-term one - month-over-month - and that the real indicator will be determined in the long-term. For now, 7.9 percent will have to do. It will either go up or down from here on. Let's keep our fingers crossed for the latter.

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