This is somewhat good news:
Hiring accelerated in November, and the unemployment rate unexpectedly plummeted to its lowest rate in nearly three years.
Employers added 120,000 jobs in November, the Labor Department reported Friday, marking a pick-up in hiring from October.
Meanwhile, the unemployment rate fell to 8.6%, the lowest rate since March 2009 and a significant decline from 9% just a month before.
About 230,000 jobs were also added in revisions to previous months.
The reason I call this somewhat good news is that the unemployment rate is not all there is. The labor force participation rate also dropped — many people simply stopped looking for work — and is currently the lowest in about 25 years. The basic measure — the percentage of our population who have jobs — did not really move. If the labor force participation had stayed level, unemployment would only have drop to 8.9%.
On the other hand, there is good news here. The job situation is the best it has been in a couple of years and is slowly improving, not rapidly collapsing. Governments at all levels have continued to shed jobs as stimulus funds evaporate and a modicum of … well, we can’t really call it “austerity”; let’s call it “semi-sanity” — returns to spending. This shows that the private sector is gaining jobs faster than the public sector is losing them. Now you combine this with what looks to be a strong Christmas spending season and, while we’re not out of the woods, we’re at least seeing some daylight.
What to do from here? Congress is contemplating extending jobless benefits. I’m not opposed if it combined with Germany-type reforms that require people to take whatever work they can get and is balanced with spending cuts elsewhere. Extending the payroll tax cut is another proposal. It may have done some good. But I don’t want us to get into the habit of keeping this thing going every year. If we balance it with spending cuts, maybe having half the payroll tax cut remain would be a good middle ground.
In the end, however, I don’t think either of these policies have contributed much. If we let them both end, the Left will scream but I doubt it will impact the economy much in real terms. If employment is picking up, then our attention needs to be even more focused on the deficit and the negative savings its giving the economy.
That’s the key to solving this in the long term.