Center for American Progress

Weak Report Underscores Need to Extend Jobless Benefits

Weak Report Underscores Need to Extend Jobless Benefits

Most Americans aren't sharing in the economy's expansion.

Sen. Charles Schumer (D-NY), left, accompanied by Sen. Jeff Merkley (D-OR), meets with reporters on Capitol Hill in Washington, Tuesday, January 7, 2014. (AP/J. Scott Applewhite)
Sen. Charles Schumer (D-NY), left, accompanied by Sen. Jeff Merkley (D-OR), meets with reporters on Capitol Hill in Washington, Tuesday, January 7, 2014. (AP/J. Scott Applewhite)

This column was originally published on MarketWatch.

Though recent economic data have signaled a strengthening U.S. economy through the end of 2013, new data released today from the Bureau of Labor Statistics show that the economic recovery has yet to turn the corner. U.S. employers added a mere 74,000 jobs in December, slowing sharply from previous months. Waning job growth did not appear to be the result of inclement weather, as seasonal hiring maintained patterns similar to previous years.

With job growth still so tepid and volatile, Congress must waste no more time in extending emergency unemployment insurance to the 1.3 million workers heartlessly and thoughtlessly kicked to the curb when this program expired on Dec. 28. Some 72,000 unemployed workers are expected to lose benefits each week of 2014 that Congress does not act.

Although the headline unemployment rate fell to 6.7%, this drop was mainly due to people exiting the labor force and therefore no longer being counted as unemployed. Unemployment rates for African-Americans and Latinos— still structurally higher than the national average — declined faster than the national average in December, to 11.9% and 8.3% respectively, as a disproportionate number of people in these groups left the labor force.

In total, more than 10 million people in the U.S. labor force were willing, able, and actively seeking work yet remained unemployed in December, according to today’s report.

Separate statistics from the BLS showed that there were three unemployed workers for every one job opening in the economy in October, the most recent month for which such data are available. With the economy creating so few new jobs, it is no wonder that nearly 40% of people counted as unemployed have been out of work for more than half a year.

Beyond the still frustratingly elevated level of unemployment, today’s BLS report, in conjunction with other recent indicators, show that economic growth is not translating into gains for a majority of U.S. workers. December continued the longer-term trend of most new jobs concentrating in industries paying below-average wages and where worker productivity and prospects for career advancement are low.

Data released last month from the Bureau of Economic Analysis showed the economy growing at a robust 4.1% pace in the third quarter of 2013. Based on Okun’s law, a statistical finding that economists use to relate economic growth to employment, one would expect job growth to be in the range of 230,000 per month; instead, job growth averaged just 167,000 per month in the third quarter.

The benefits from this faster economic growth have not trickled down to the average worker.

Over the past three months, the average wage rate for non-managerial workers increased by 16 cents after inflation. With nearly 95 million non-managerial workers in the economy, that’s a wage increase of $2 billion. In contrast, third-quarter corporate profits increased by $39.2 billion, and taxes on corporate income decreased by $400 million in the third quarter of 2013. Though growth has been profitable, this prosperity is not being broadly shared throughout the economy.

This is no time to relent on policies to support job growth and to aid the unwillingly unemployed.

Extending emergency unemployment insurance through 2014 would add an additional 200,000 jobs to the U.S. economy this year, according to analysis by the Congressional Budget Office. As American Enterprise Institute economist Michael Strain wrote last month, “When millions of workers are suffering … extending [emergency unemployment insurance] is the prudent course.”

Policy economists across the political spectrum are calling for extended unemployment benefits. It is clear that congressional conservatives are the only ones making this a partisan issue, forcing needless injury on families across the country and our economy overall.

Adam S. Hersh is an economist at the Center for American Progress.

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Adam Hersh

Senior Economist