What does the unemployment rate really tell us?

In The Spotlight

As the state of the economy and the issues surrounding gaps in income inequality continue to absorb the national spotlight, some may wonder what exactly any of the numbers that are thrown around in the media actually say about, well, anything. What does it mean when the unemployment rate drops? Does that mean people are finding jobs and the economy is improving? What do any of the numbers surrounding unemployment really say about the state of the economy?

Recently you may have heard that the unemployment rate has dropped. While that is true, it does not necessarily indicate a positive occurrence.  According the jobs report of December, 74,000 jobs have been added to the economy, and the jobless rate is down to 6.7%. Adding jobs and seeing a decrease in the jobless rate, both sound like really good things on the surface. Upon further examination of what exactly these numbers mean, the poor state of employment across the country begins to reveal itself.

While 74,000 jobs sounds better than no jobs, many economic policy analysts  expected the increase to be around twice that number.  Decreases in the unemployment rate may also, initially, sound like something positive. While many associate low unemployment rates with an improving economy, it can also indicate something quite negative. The recent drop in the unemployment rate has largely been noted to truly highlight the number of people who  have dropped out of the workforce and are no longer considered to be looking for jobs.

The recent reports related to the state of the job market coincide with the recent cuts to extended unemployment benefits. The  Center for American Progress, stresses that the recent jobs report has revealed the need for further extension of benefits. The report highlights that the jobless are further facing a number of hurdles, and are in great need of assistance while they search for jobs in the continuously declining market.

Direct Service Implications

As the job market continues to fail to produce an increase in jobs, direct service practitioners will continue to be met by clients who are in desperate situations. The recent jobs report directly indicates that providers are going to be working within a context where jobs and income may be scarce. With cuts to extended unemployment benefits, clients may begin to experience impoverished living conditions. Service providers must work to establish ways enable their clients to access job opportunities and allocate income. Finding resources to help clients in their job search could be one way to alleviate anxiety around the job search.  Helping clients to thoroughly prepare for the application and interview process can equip them with the tools they need for success.

Courtesy of McSilver Institute of Poverty Policy and Research who has kindly given SJS permission to syndicate this piece.

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