While the unemployment rate fell from 7.0% to 6.7% and sounds like good news, the facts behind those numbers tell a different story. According to the January 10 issue of MarketWatch, the decrease is due to more discouraged out-of-work people dropping out of the labor force. Once they drop out of labor force, they are not counted. As a result the labor force participation rate has fallen to 62.8%. That's the lowest since 1977 and reflects the economy is not recovering like some hopefuls suggest. To put it into perspective, we have the same number of people in the labor force now as we did in 2007.
Battle for long term benefits extension
With a strong focus on the 1.3 million people who have lost their long-term unemployment, at least for now, the Labor Department offers a snapshot of the bigger picture with 10.4 million unemployed in December.
"The number of unemployed persons declined by 490,000 to 10.4 million in December, and the unemployment rate declined by 0.3 percentage point to 6.7 percent. Over the year, the number of unemployed persons and the unemployment rate were down by 1.9 million and 1.2 percentage points, respectively." Labor Department
Some say this makes extending the unemployment benefits all the more important while others like Rand Paul say it is a "disincentive to work."
Only 74,000 jobs added in December
The December report showed only 74,000 jobs added in December as payroll growth slowed significantly after several months of solid gains. This is the lowest number of jobs added since January 2011. In fact, this low number took experts by surprise. Economists had expected the U.S. economy to add 200,000 jobs in December. With that said, experts also expect this dip in jobs added to be temporary because it doesn't match up with other major economic data.
Involuntary part-time workers
Along with a low number of jobs added, the number of people employed part time for economic reasons (also referred to as involuntary part-time workers) remained essentially unchanged at 7.8 million in December. These people are working part time because their hours have been cut or because they weren't able to find full-time work.
According to the Labor Department, the average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.4 hours in December. The manufacturing workweek stayed at 41.0 hours, and factory overtime edged up by 0.1 hour to 3.5 hours with the average workweek for production and nonsupervisory employees on private nonfarm payrolls down by 0.1 hour to 33.6 hours.
The real unemployment rate
While an unemployment rate of 6.7% looks good on paper, according to CNBC "A broader measure of unemployment that includes discouraged and underemployed workers held steady at 13.1 percent."