Unemployment Rate Falls to 9.7%

Annual adjustments show fewer jobs in economy despite rate drop

0605_unemploymentThe Department of Labor reported today that in January, the U.S. unemployment rate decreased from 10.0% to 9.7%, and a survey of households shows that employment fell by 20,000 jobs. Since the start of the recession in December 2007, payroll employment has fallen by 8.4 million.

“Nominally, the drop looks good. But people being out of work and not looking for work has to be a big part of [the decreased unemployment rate],” says Roderick Harrison, a senior research scientist at Howard University and a fellow at the Joint Center for Political and Economic Studies.

In fact, there were 1.1 million discouraged workers in January (up from 734,000 a year earlier). These are people not currently looking for work because they believe no jobs are available for them.

The number of people unemployed due to job loss decreased in January by 378,000 to 9.3 million, and household survey data developed by the U.S. Census Bureau shows that 784,000 people are reporting that they have jobs.

On the other hand, the Department of Labor’s annual benchmarking process—which adjusted employment numbers from April 2008 until March 2009 based on tax records from employers—shows that America’s economy had 930,000 fewer jobs than previously believed. Additionally, 409,000 jobs have been lost since then.

“It’s bizarre,” says Larry Mishel, president of the Economic Policy Institute. “[The findings] are going in opposite directions. It is as if employers reported fewer jobs, but fewer people are unemployed.”

While the overall unemployment rate decreased, it went up for blacks from 16.2% to 16.5%. The jobless rate for Hispanics and whites declined by 0.3% to 12.6% and 8.7%, respectively.

Harrison says that during most recessions, employment is usually worse for blacks: “Even when the recovery begins, it will take a while before it reaches the general black population.”

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