Statement: Chad Stone, Chief Economist, on the October Employment Report

WASHINGTON - Today’s employment report contains much better news on job creation
than expected, but it does not change the underlying fact that the
economic recovery remains weak and the economy needs a boost. For the
tenth straight month, the private sector created jobs, but the pace of
job creation has to pick up much more to lower the unemployment rate
(see chart).

This week the Federal Reserve acted on its concerns
about the sluggish recovery and high unemployment by stepping down
harder on the monetary policy accelerator, purchasing $600 billion of
longer-term Treasury securities in order to lower longer-term interest
rates. Congress should not impede these measures by slamming on the
fiscal policy brakes.

That’s what would happen, however, if
lawmakers let the federal emergency unemployment insurance (UI) measures
enacted in the recession expire as scheduled at the end of this month.
These measures provide additional weeks of federally funded UI benefits
to workers who exhaust their 26 weeks of regular state UI before they
can find a job.

UI
benefits provide important financial assistance to unemployed workers
and their families, but they also support higher levels of consumer
spending, which boosts economic activity and job creation. Among the 11
fiscal policy measures that the Congressional Budget Office analyzed for
increasing economic growth and employment in the next year or two, CBO
put aid to the unemployed at the top of the list.

At a time when
41.8 percent of the unemployed have been looking for work for 27 weeks
or longer, cutting back UI benefits to 26 weeks in most states would
impose additional hardship on large numbers of the unemployed and their
families. And it would endanger an already fragile economic recovery and
cause substantial job losses. Congress has provided federal emergency
UI benefits in every major recession since the 1950s, and has continued
those benefits until the economy was back on track and job prospects
were improving. We’re not there yet. October’s unemployment rate of 9.6
percent is 2.4 percentage points higher than the highest rate (7.2
percent) at which benefits ended in any previous program.

About the October Jobs Report

• Private
  and government payrolls rose by 151,000 jobs in October. Private
  employers on net added 159,000 jobs, but those gains were partly offset
  by a decline in government jobs (primarily local government jobs).
• So
  far this year, private payrolls have expanded by 1.1 million jobs, a
  pace of 111,500 jobs a month, while total nonfarm employment (private
  plus government jobs) has grown by 874,000, or 87,400 a month. Job
  creation of 100,000 to 125,000 a month is necessary just to keep up with
  population growth and keep the unemployment rate from rising; growth of
  200,000 to 300,000 jobs a month is typical in strong economic
  recoveries.
• In October, there were 7.5 million fewer jobs
  on nonfarm payrolls than there were when the recession began in December
  2007, and 7.4 million fewer jobs on private payrolls.
• The unemployment rate remained 9.6 percent in October, and the number of unemployed remained 14.8 million.
• The
  job growth reported by employers was not reflected in the Labor
  Department’s household survey, which showed that labor force
  participation declined in October and the number of people with a job
  fell. In the aggregate, people who lost their jobs appear to have left
  the labor force. The share of the population working or looking for work
  (the labor force participation rate) declined to 64.5 percent, its
  lowest level since 1984. The share of the population with a job, which
  plummeted in the recession to levels last seen in the mid-1980s, fell to
  58.3 percent, its lowest level since December 2009.
• It
  remains very hard to find a job. The Labor Department’s most
  comprehensive alternative unemployment rate measure — which includes
  people who want to work but are discouraged from looking and people
  working part time because they can’t find full-time jobs — was 17.0
  percent in October, not much below its all-time high of 17.4 percent in
  October 2009 in data that go back to 1994.
• Long-term
  unemployment remains a significant concern. Over two-fifths (41.8
  percent) of the 14.8 million people who are unemployed — 6.2 million
  people — have been looking for work for 27 weeks or longer. These
  long-term unemployed represent 4 percent of the labor force. Prior to
  this recession, the previous highs for these statistics over the past
  six decades were 26.0 percent and 2.6 percent, respectively, in June
  1983.