The Bureau of Labor Statistics released a report Friday showing decreased unemployment through the month of January, dropping the nationwide unemployment rate to 8.3% – the lowest rate in three years. Job growth exceeded expectations, numbering 243,000 new jobs in January. This report follows December’s gains of a revised 203,000 new jobs, and prompted an optimism-fueled 1% rise in stock prices on Wall Street shortly after the report was released Friday morning.
The rise is due almost entirely to private-sector job growth. The report presents the vague phrase “little changed” to describe government employment rates. Private sector employment is credited with an increase of 257,000 jobs, primarily in professional and business services, leisure and hospitality, and manufacturing. The 14,000 difference is not directly cited, though information and media was reported to have declined by 13,000 jobs, with significant losses in the film and music industries.
Though the report encourages belief in economic recovery, other indicators of economic recovery, such as house prices and consumer spending, continue to show weakness, as does the continuing caution by the Federal Reserve. Analysts also point out that the 8.3% does not include the underemployed (people working part-time jobs for lack of full-time employment), the marginally attached (jobless people who want work, but had not applied for a position for 4 weeks as of the survey date), or the discouraged (jobless people who have given up looking for a job entirely). These 11 million people are included in the “U-7” calculations, putting the total broad un- and under-employment rate at 16.9 according to PBS, a slightly more optimistic 15.1 according to the NY Times. Both agree that these numbers show improvement, but more is needed.
Underemployment is particularly troublesome for the economy, because these positions have little or no chance of becoming full-time, yet financial concerns continue to keep workers in these permanent part-time positions. Many of these positions can be found in retail and other service industries, but are increasingly common in the general workforce. Many employers have cut hours or replaced full-time positions in reaction to decreases in business, or to take advantage of the lower cost of part-time workers in terms of salaries and benefits.
The irony of the situation lies in the high demand for skilled workers. As the NY Times reports, employers often struggle to find workers with the specific skills needed in their industries. Jobs that require little higher education or few unique skills, such as support services, are increasingly shifting toward contract workers and other temporary staffing strategies. Full-time staff positions are reserved for skilled professionals; too-frequently obtained only through recruitment from industry competitors. This can only emphasize the importance of education and training (or re-education and re-training) for workers in specific industries and fields of growth to tackle the problem of long-term unemployment.
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About The Author: Tom Davidson is the acting Director of Sales & Operations for Express Schools, LLC. Since 1996 the companies under this banner have offered online real estate licensing and insurance licensing courses as well as online real estate exam prep and insurance exam prep.