Good News for American Jobs? The Devil is in the Details

Last week saw the release of monthly employment data by the Labor Department. At face value, the overall news was good – the unemployment rate in the United States, at approximately 8.6%, is at its lowest projected level in years. However, as a recent op-ed in The Economist noted, the state of the union remains dire. Much of the malaise can be felt within the ostensibly improving American job market, where in spite of some good news there are plenty of reasons to remain cautious.

First, the facts. Unemployment, according to the Labor Department, decreased over the course of January. At the end of the month, there were roughly 12.8 million Americans looking for work who could not find it. This represents approximately 8.6% of individuals who are employed or would like to be employed, a number that is down from a mid-2010 peak of nearly 10%.  The White House was predictably excited by the news, given the role unemployment can potentially play in elections (for an excellent discussion of the difficulty in measuring the impact of unemployment, check out this New York Times blog post from last summer).

Yet among the jubilation there is continued cause for concern. African American unemployment, though slightly decreased, remains significantly higher (13.6%) than for whites (7.4%). Latinos also have a higher unemployment rate that remained relatively stable last month (10.5%). Similarly, the number of long term unemployed individuals (those without work for more than 27 months) remained static, representing over 40% of the unemployment rate as a whole.

Furthermore, there are a quite a few individuals who for one reason or another are not in a stable work position but are not counted as unemployed. The Labor Department noted that 2.8 million Americans are only marginally attached to the labor force (unemployed, but had not looked for work within the last four weeks). These individuals are not counted in the unemployment rate. Nor are individuals who are under employed – those with part time work who would rather have full time work (another 8.2 million). As others have noted, this nearly doubles the number of individuals who find themselves looking for or wanting work.

The unemployment rate is also adjusted seasonally, and masks the fact that the economy lost nearly 2.7 million jobs last month. Many, if not most, of these jobs were seasonal ones covering the holiday shopping season. The projected gains in employment last month are therefore the gains in the job market in spite of the overall loss in jobs, and the technique for seasonal adjustment may overstate the overall gains in jobs. Further, any gains in jobs should be noted in the context that we are still a long way from the pre-recession job picture.

These cautionary notes come as I read Arne Kalleberg’s Good Jobs, Bad Jobs. Published with the support our parent organization, the American Sociological Association, Good Jobs, Bad Jobs describes the tremendous growth in low wage, low skill employment. Such “precarious” jobs may be the easiest to come by in certain markets (think aspects of service industries, also areas where we see some of the stronger recent private sector gains). Unemployment rates treat all jobs as equal in a sense – the statistic ignores the quality of the jobs available and obtained. For many Americans, then, the recession may not feel over even if they have a job.

Unemployment, then, is not at all the full picture. We should be elated that more and more Americans are finding work. However, if the type of work available is not of the desirable sort, there are many reasons to treat such increases with caution.