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Unemployment rate falls as hundreds of thousands give up job search

By Masao Suzuki |
December 4, 2011
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San José, CA - On Friday, Dec. 2, the U.S. Department of Labor said that the official unemployment rate fell to 8.6% in November, from 9.0% in October. Despite being the lowest unemployment rate since March of 2009, the fall in the unemployment rate was mainly due to the more than 400,000 jobless workers who gave up looking for work and were no longer counted as unemployed.

Businesses did continue to hire at a modest rate of 120,000 net new jobs in November, led by 50,000 more retail jobs, many of which were part time, and more than 22,000 temporary jobs. But 20,000 government jobs were lost, mostly at the local level, including another 6000 jobs in local schools.

But there was no improvement in the job market for oppressed nationalities, who suffer from racism and discrimination. Employment among African Americans actually dropped in November, with 193,000 fewer people working and employment among Latinos dropped by 45,000. The unemployment rate for African Americans rose to 15.5% from 15.1% in October, while the unemployment rate for Latinos stayed the same as 100,000 gave up the search for jobs and were not counted as unemployed.

Despite the large number of unemployed dropping out of the labor force, the number of long term unemployed, those who were out of work for more than six months and who are still looking, was about 5.7 million. About 3.5 million of these long-term unemployed were collecting federal extended unemployment insurance benefits.

But if Congress does not act by Dec. 31, when funding for these benefits runs out, almost a half a million jobless workers will lose their Federal Extended Benefits (EB) immediately and another million workers getting state unemployment insurance or on the Federal Emergency Unemployment Compensation (EUC) will have their benefits run out in January. Over the next four months ending in May, almost 4 million more unemployed will lose their state or EUC benefits. All told, nearly 6 million workers are at risk of losing their unemployment insurance benefits if Congress does not act.

The broadest measure of employment, the percent of the population 16 years old and older with jobs, was only 58.5% in November, as compared to 62.7% in December of 2007 when the last recession started. To bring total employment to where it was before the recession started would take more than 10 million more jobs, which shows how deep a hole the labor market is in.

Another sign that the labor market is still very weak is that that average hourly earnings fell by two cents an hour, or 0.1%, after falling seven cents, or 0.3% in October. Over the last year real earnings, or earnings adjusted for inflation, have fallen 1.6% as continued high unemployment has allowed employers to keep wage increases below the rate of inflation. This has boosted profits: for nonfinancial corporations, profits per unit of output have gone up 75% since the end of the recession in 2009. At the same time workers’ wages and benefits per unit of output have gone down almost 3% over the same period of time.