The Economy Continues to Lose Jobs

Last Updated Jan 8, 2010 6:22 PM EST

According to today's employment report, last month the economy lost 85,000 jobs with the losses concentrated in manufacturing and construction, and the unemployment rate held steady at 10.0%.


How can the unemployment rate hold steady even though we are losing jobs? An important part of the employment story is that the labor force has been shrinking as people give up searching for work. As these people leave the labor force, the number of people searching for work falls, and unemployment rate is held down. If the people leaving the labor force had continued to search for work, unemployment would have been higher by several tenths of a point.

There erosion of the labor force since May has totaled 1.9 million people, with a fall of 661,000 last month alone.


The employment to population ratio is also falling (from 58.5 to 58.2 percent):


The fall in jobs coupled with the continued flight from the labor force indicates that labor markets are still struggling. Will labor markets get the help they need? A (very) modest jobs bill has passed the House, but the Senate has not yet taken up the legislation. Given the political climate in Washington, it's unlikely that the bill will be large enough to give labor markets the help they need. And the lack of urgency on this legislation means that if and when the Senate does act, the help is unlikely to come soon enough to give assistance to the many households struggling to make it through the downturn.

Labor markets face a long, uphill battle to recover, and the lack of help from policymakers won't make it any easier.