Unemployment Rates Down to 8.9%
By Krystle Weeks | Friday, March 4th, 2011 | PolicyAccording to a recent article in The Wall Street Journal, the unemployment rates have dropped from 9% to 8.9%. While this may signal a future drop in unemployment rates, there should be some caution with the continuing rise in the costs of fuel, which could cause unemployment to skyrocket once more.
Payrolls rose by 192,000 last month with the addition of 22,000 jobs. Compared to December and January’s dismal job numbers, this is welcome news, as the economy is struggling to recover. However, there is one interesting fact that was not noted in these new unemployment numbers, and this was the number of Americans who have given up searching for jobs. If this were factored into the actual number, the unemployment rate would have jumped once again.
Of course, there is cautious optimism with the recent news. U.S. House Majority Leader, Eric Cantor (R-Va.), said in a statement that the numbers are “an encouraging sign that businesses are beginning to hire and people are getting back to work.” Cantor further states that the numbers are still too high and there needs to a push to ensure that employers have the fiscal needs to accommodate new employees and the opportunities to expand their business.
In other words, it is best to approach these numbers with some skepticism. However, if these numbers continue to rise, we could be headed back to the unemployment rates of pre-recession times.
Cross posted at Crystal Clear Conservative
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About the author
Growing up in Maryland typically does not yield a Republican. Fortunately, Krystle Weeks was one of the lucky few booted to the Commonwealth for her staunch conservative views. From an early age, she has been debating politics, and since 2006, she has been involved here in the Commonwealth helping Republican candidates to victory. Aside from politics, Krystle is a runner and a dynamite cook. You can email her here. Krystle also blogs at Crystal Clear Conservative and Charm Offensive Cooking.
Comments
7 Responses to "Unemployment Rates Down to 8.9%"
One thing you could say about this is, it’s about time.
Corporate profits have been up for the last year, but we haven’t seen a corresponding increase in hiring.
Stay on this Krystle, good work!
The real story here is the number of people in the labor market. If the labor market participation was what it was 4 years ago, the unemployment rate would be 11.5%.
Yes, I have to concur with your assessment that…” if these numbers continue to rise, we could be headed back to the unemployment rates of pre-recession times.” So business leaders have to ask themselves, what could kill this recovery? The answer is, politics. That is, random, meat ax cuts to government spending is a threat to the recovery. If these cuts lead to the loss of hundreds of thousands of federal, state, local, and private jobs, then the guarded optimism many feel could turn to pessimism. Fact is, in the short term, cutting the rate of increase may be the best rational alternative; leave structural changes, like defense cuts, reducing the federal workforce, raising the retirement age to 70, changing the formula for SS benefits, to after the next election.
SV,
You are correct. Corporate profits are up without a commensurate increase in hiring. This is an economic phenomenon that we identified after the 1990-91 recession–the jobless recovery.
In a nutshell, during a recession companies lay off their least productive workers. Not necessarily those who are not hard working, but those who contribute the least to the bottom line. (“Does the deputy assistant HR director really need his own secretary or can he share?”) Production workers, meanwhile, increase their productivity to demonstrate their worth to the company. They take less sick leave or personal time and generally work harder.
When the recession ends, companies find that they can mean new demand with the existing workforce. So, they become more profitable without hiring.
It is sad, but it is reality.
HR- The phenomenon you identify certainly exists and I agree we saw it in 1991 as well. Helped defeat the first Bush. If we use that as our guide, we might expect to see significant improvements in unemployment, all other things remaining equal, in 2012.
SV,
The tipping point in a jobless recovery is when businesses expand their sales beyond pre-recession levels. Then they must increase the workforce to meet the new demand.
I’m not sure that will happen by 2012. Although unemployment dipped slightly in February, Kyrstle is right–the other economic indicators are mixed at best and skepticism is certainly warranted. My opinion is that the posturing that both parties are doing on deficit reduction will ensure continued gridlock in the Congress. The $64,000 question for November 2012 will be which party the voters will blame. That is why both parties are running as hard as they can away from another debt ceiling train wreck while spewing their talking points.
Well, the tea party and independent types sided with the GOP last time around. They will be watching for two improvements. Jobs and Houses. Both parties will be grabbing data to at least show the economy is gaining speed under their watch. Whether it’s true or not. So far, the politicians have been giving the finger to the citizens and big free fraud pay outs to the banksters while they manipulate employment numbers and ignore the laws of the land. There will be a price to be paid in 2012 both in public moral hazard and direct political retribution if they continue this model of governance.
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