Understanding the Anemic Jobs Recovery

(Originally published here.)

According to the latest jobs report, released this morning, the unemployment rate plunged to 6.7 percent, from 7.0 percent in November, but the number of Americans with a job increased by only 74,000. Here’s a deeper look at other jobs data:

Unemployment insurance filings are at the lowest level in years — a level normally associated with a vibrant economy. But the unemployment rate remains far higher than at any point since the early 1990s. Normally, unemployment insurance filings closely track the unemployment rate.

Data: Bureau of Labor Statistics

Data: Bureau of Labor Statistics

The reason for this is that insurance claims track the difference between hirings and firings. During the recession hiring collapsed and layoffs spiked, so initial claims soared. Employers quickly stopped shedding workers but haven’t picked up the pace of new hires.

Data: Bureau of Labor Statistics

Data: Bureau of Labor Statistics

So the number of people unemployed for less than 15 weeks is basically the same as it was before the recession…. By contrast, the number of people unemployed for 15 weeks or more is about 2.6 times what it was at the end of 2007.

Data: Bureau of Labor Statistics

Data: Bureau of Labor Statistics

That’s why the average unemployed person has been out of work for longer than anyone since the end of World War II.

Data: Bureau of Labor Statistics

Data: Bureau of Labor Statistics

(Matthew C. Klein is a writer for Bloomberg View. Follow him on Twitter.) 

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About Matthew C. Klein

I write about the economy and financial markets for Bloomberg View. Before that I wrote for The Economist on a fellowship provided by the Marjorie Deane Financial Journalism Foundation. I have worked at the world's largest hedge fund and read every FOMC transcript since May, 1987.
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