December Unemployment Report Shows Little Improvement

The Labor Department report indicated the U.S. economy added 103,000 jobs in December. The Report also indicated the national unemployment rate dropped slightly. Although this sounds positive, there are a few things one must keep in mind.

by Wesley Fox

The Labor Department released its monthly unemployment report today, which indicated the economy added 103,000 jobs in December. The Report also indicated the national unemployment rate dropped slightly to 9.4 percent. Although these numbers sound positive, there are a few things one must keep in mind.

Adding 103,000 new jobs is simply not enough. According to Fox News the economy needs to add 125,000 new jobs every month just to keep up with population growth and prevent the unemployment rate from rising. Also, the economy has lost over 7 million jobs in the recession. At this rate, it will take over five years to get back to pre-recession employment levels.

So how is it that the unemployment rate is dropping even though we should technically be breaking even (103,000 new jobs compared to 125,000 needed to keep up)? The answer is the unemployment rate doesn’t tell the full story. According to Phil Izzo of the Wall Street Journal, the answer is that the Labor Department’s unemployment rate does not count those who have given up looking for work as well as those who are working part-time but want full time employment. When people stop looking for work (referred to as “discouraged” workers), they are no longer counted as unemployed. In December there were 1.3 million discouraged workers, which is 389,000 more than a year ago. When you add in part time workers seeking full time employment, the unemployment rate grows to 16.7 percent.

This is not a good time to be raising taxes. Unfortunately, the Illinois General Assembly is currently considering a 2.25 percent increase in the income tax rate to 5.25 percent. The Institute has found that just a 2 percent increase in the income tax rate could cost 217,519 private sector jobs in Illinois over the next three to five years. Find out more in the Institute’s Report: How to Lose Jobs and Alienate People.