November jobless rate of 8.6 percent is a two-year low

Posted: December 03, 2011

The nation's unemployment rate dipped to a two-year low of 8.6 percent in November, even as the economy generated barely enough jobs to keep up with the increase in working-age population, the U.S. Labor Department reported Friday.

The October jobless rate was 9 percent. The rate hasn't been at 8.6 percent since March 2009.

"It was nice to see the unemployment rate come down, but if we are to see it continue to fall, firms will have to hire a lot more people than they did in November," said economist Joel Naroff of Naroff Economic Advisors Inc., in Bucks County.

Private-sector payrolls grew by 140,000 jobs in November, only to be offset by 20,000 government job cuts, most in local government, the report said. The U.S. Postal Service shed 5,100 jobs.

At least 100,000 to 150,000 new jobs must be created each month simply to accommodate population growth. It would take significantly more to erase the jobs deficit caused by the recession.

Since October 2010 - 16 months after the official end of the recession - the nation's payrolls have been expanding steadily, although slowly.

"Job losses have more than subsided," said James Sherk, a senior policy analyst and labor economist with the Heritage Foundation, a conservative think tank.

On the other hand, he said, "job creation has stalled."

Although the drop in the unemployment rate is dramatic, it says more about the persistence of this jobless recovery than it does about people finding work. Many are simply leaving the workforce, some because they are discouraged about job prospects.

The labor force, defined as anyone working or actively looking for work, is smaller than it was a year ago, despite increases in working-age population. Even more telling, the proportion of people in the labor force continues to decline.

There are 13.3 million jobless in the country, the government reported, down from 13.9 million.

It will be interesting to see how Washington handles the 8.6 percent jobless statistic as Congress decides, perhaps as early as next week, whether to extend federally funded unemployment benefits.

In Philadelphia, unemployed commissary services manager Jeffrey Scott will be among those watching.

As of Friday, the House Democrats had proposed an extension, and the House Republicans were drafting their version. The pressure is on to make a decision before Congress leaves for the holidays.

"It makes me very nervous," said Scott, who supervised 17 civilian employees and 30 inmates in a warehouse operation to deliver toiletries and other sundry items to the City of Philadelphia's 9,500 prison inmates.

While even conservative economists agree that an extension is necessary, there is disagreement over how long benefits should last and how they should be financed.

Extending the current program, which can add up to 53 weeks of federally funded benefits to the usual 26 weeks funded by states through payroll taxes, will cost $4.5 billion, according to estimates.

In November, the average length of unemployment was 41 weeks, up from 39 as of October, the Labor Department reported, and 43 percent of the unemployed have been out of work for more than six months.

Scott, who has been out of work since October, thinks that benefits should be extended, "at least until the economy resolves itself." Scott lost his job after his employer, Aramark Corp., lost the contract to run the prison commissary.

His 26 weeks of state-funded benefits would carry him through March, but unless Congress acts, that's all he'd get, unlike those who lost jobs earlier and received 99 weeks of benefits as a result of previous extensions.

If Congress doesn't act, 1.8 million Americans will run out of federal benefits in January, among them 74,600 in Pennsylvania, 85,900 in New Jersey, and 5,000 in Delaware.

"The job market isn't improving," Scott said. "Every place I apply, they are in the process of laying people off. That kind of makes it difficult to get a job."

Much of November's hiring came in sectors that traditionally pay less.

For example, the department reported 49,800 new retailing jobs in November. Actually, 423,500 retail jobs were added, as would be expected in holiday hiring, but in reporting the statistics, the government smooths out major seasonal variations.

In a new wrinkle, clothing retailers added the most workers; electronics stores had been the most likely to hire in the past.

Hiring was also up in health, manufacturing, and professional and business services, including law and computer systems design. Leisure hiring expanded, but gambling employment fell, and hotels lost 11,800 jobs.

Construction continued its downward slide, losing 12,000 jobs. Actually, as cold weather set in, 120,000 jobs were lost, but again, the government report smooths out seasonal variations.

The Labor Department's report consists of two surveys: one of households, asking about their personal employment situation, and one of businesses, asking about their hiring.

The Labor Department revised its payroll numbers, showing that 20,000 more jobs were created in October and 52,000 more in September.

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