The October No Surprise

U.S. employment in October grew by 171,000 jobs, and the unemployment rate ticked up slightly from 7.8 to 7.9%, according to a Bureau of Labor Statistics report out today.

Compared to the second quarter of 2012 when employment increased by just 66,000 jobs a month, October's job numbers are good news.

The trend was matched in the Household Survey, which registered an increase in employment of 410,000 jobs over the month. In the second quarter, employment in the Household Survey increased by 186,000 jobs a month.

(As I explain here, there are two surveys that track trends in the job market — one of individuals, i.e., the Household Survey, and the other of employers, i.e., the Establishment Survey).

The figure below presents employment as measured in both the Household (CPS) and Establishment (CES) surveys, indexed to January 2010.

October's report makes clear that employment growth is back on track. I would expect this bodes well here in Pennsylvania where we too should see a similar modest improvement in the pace of job growth in the months ahead. Although the unemployment rate is up in Pennsylvania since May, I expect it will again resume its downward trajectory once we get some better job numbers.

The federal spending cuts that will be triggered by the so-called fiscal cliff as well as the potential end of another round of federal extended unemployment insurance benefits do represent important risks to better job growth in 2013.

Below is a roundup of analysis of the jobs picture from the nation's best labor economists and analysts.

By demographic group, white men have been the biggest gainers in the last year. Their unemployment rate fell from 7.8 percent a year ago to 6.6 percent in the October data. Their EPOP [employment-to-population rate] rose from 68.1 percent to 68.7 percent. White women also saw a substantial drop in their unemployment rate over the last year, from 7.0 percent to 6.3 percent, but this was accompanied by a small decline in their EPOP from 55.1 percent to 54.9 percent.

The unemployment rate for black men over the last year fell from 16.0 percent to 14.1 percent, while their EPOP rose from 57.5 percent to 58.1 percent. The unemployment rate for black women fell more modestly from 12.6 percent to 12.4 percent, but their EPOP rose by 0.9 percentage points, from 55.0 percent to 55.9 percent. The unemployment rate for Hispanics fell from 11.4 percent to 10.0 percent over the last year while their EPOP edged up from 59.3 percent to 59.7 percent.

In October, the number of people who are working or trying to find work went up 0.2 percent, reversing some of the 2012 decline in people participating in the economy. The number of unemployed and employed both increased last month, with the increase in the unemployed coming from people interested in working again. The number of people who want to work, but have given up looking for a job also declined. Though we can’t see the specifics, it looks like people are starting to try and find employment again.

Economists have been debating what to make of people giving up looking for work in this recession. Would these workers be able to return as the economy picks up, or would they become permanently detached? Will the specific short-term problems we find ourselves in during the Great Recession turn into long-term problems? The data from last month is very encouraging when it comes to this issue. Though too early to say, it may mean that the best way to address the issues of long-term unemployment and those who have stopped looking for work is to simply continue to grow the economy through more aggressive stimulus.

And things could soon get worse. The federal unemployment insurance program for job seekers out of work six months or longer is set to expire by the end of the year. If Congress fails to renew it, unemployment insurance will be cut off for more than two million long-term unemployed Americans between Christmas and New Year’s. Almost a million more will lose jobless aid in the first three months of 2013, so that by April, some three million Americans will be without the crucial bridge to a job that unemployment insurance provides.

An abrupt expiration of the federal Emergency Unemployment Compensation program comes as long-term unemployment remains near record levels. It would leave the unemployed with no further jobless aid beyond the 26 weeks provided by most states, even though the average unemployed worker is out of work for 40 weeks, and there are more than three unemployed workers for every one job opening.

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