Commentary

Unemployment at 9 Percent is Still Disappointing

Unemployment fell from 9.4 percent to 9.0 percent in January—but don’t jump for joy just yet. Nonfarm payrolls only added a net of 36,000 jobs, and we need roughly 125,000 net jobs a month just to keep up with population growth. The WSJ reports this morning that stock have been down some on the job news since forecasts had been anticipating as much as 136,00 jobs in January:

Nonfarm payrolls rose by 36,000 last month as private-sector employers added 50,000 jobs, the Labor Department said. The December number was revised to show an increase of 121,000 jobs, from a previous estimate of 103,000. Economists were expected an increase of 136,000 jobs in January. “It’s obviously a disappointing number given where we’ve been,” Brian Levitt, economist at OppenheimerFunds, Inc. said.

One of the reasons that the rate fell with just a few jobs added is that there has been an increase in those not looking for work. The Bureau of Labor Statistics reports:

In January, 2.8 million persons were marginally attached to the labor force, up from 2.5 million a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

See the full BLS report from this morning here.

In fairness, the report is pretty confounding in that its seems to be moving in two directions at once. There are few jobs but a lower rate of unemployment. Even the underemployment figure fell to 16.1 percent from 16.7 percent. However, adding to the mix Gallup’s estimate that unemployment is closer to 9.8 percent (not seasonally adjusted) stirs the pot once again. And the fact that the actual jobs gain (which will be adjusted by deeper measures next month) was so low relative to expectations should not be overlooked.

Anthony Randazzo

Anthony Randazzo is director of economic research for Reason Foundation, a nonprofit think tank advancing free minds and free markets. His research portfolio is regularly evolving, and he maintains a wide interest in economic policy at both a domestic and international level.

Randazzo is also managing director of the Pension Integrity Project, which provides technical assistance to public sector retirement system stakeholders who are seeking to prevent pension plan insolvency. His research focus on the national public sector pension crisis has a dual focus of identifying the systemic factors that cause public officials to underfund pension obligations as well as studying the processes by which meaningful pension reform can be accomplished. Within the Project he leads the analytics team that develops independent, third party actuarial analysis to stakeholders considering changes to public sector retirement systems.

In addition, Randazzo writes about the moral foundations of economic theory, and is currently developing research on the ways that the moral intuitions of economists influence their substantive findings on topics like income inequality, immigration, or labor policy.

Randazzo's work has been featured in The Wall Street Journal, Forbes, Barron's, Bloomberg View, The Washington Times, The Detroit News, Chicago Sun-Times, Orange-County Register, RealClearMarkets, Reason magazine and various other online and print publications.

During his tenure at Reason he has published substantive research on housing finance, financial services regulation, and various other aspects of economic policy at the federal level. And he has written regularly on labor economics, tax policy, privatization, and Turkish-U.S. political and economic issues.

Randazzo has also testified before numerous state and local legislative bodies on pension policy matters, as well as before the House Financial Services Committee on topics related to housing policy and government-sponsored enterprises.

He holds a multidisciplinary M.A. in behavioral political economy from New York University.

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