Friday’s jobs report had a huge surprise with a massive drop in the unemployment rate to 4.6%, the lowest since August 2007.
Despite that good news, the details of the report show that for those that are unemployed, it is still tough out there.
For one thing, people that are out of work have been without a job for a pretty long time. The average length of unemployment as of November was 26.3 weeks. This is the lowest since August 2009, but much higher than in August 2007, the last time unemployment was this low, when the average length of unemployment was just 17 weeks.
Additionally, as noted on Twitter by Indeed Chief Economist Jed Kolko, the percentage of workers that have been out of a job for six months or more sits at 24.8% of all unemployed. This is solid for this cycle, the lowest since March 2009, but again is well above the last time the unemployment rate was at 4.6%. In August 2007, the percentage was just 17.5%.
There many possible reasons for this. Firms have been noting as the labour market has improved that they are struggling to find workers that have the skills needed to fill their roles (the so-called skills gap). Essentially, the workers that are not yet employed either don’t have the education or the technical training to fill the positions businesses need.
To that end, the unemployment rate for Americans with less than a high school degree and over 25 (so unlikely to be in college) is still well above its August 2007 level at 7.9% versus 6.5% nine years ago.
So yes, the labour market is approaching the strength it had before the recession and there is plenty to be happy about in the most recent jobs report. But, for those that still find themselves out of work, the American job market isn’t quite fixed yet.