South By North Strategies, Ltd.

CHAPEL HILL, NC (January 9, 2015) – In December, the national labor market added 252,000 more jobs than it lost due primarily to gains in the private sector. And in December, the unemployment rate fell to 5.6 percent. Unfortunately, 71 percent of the decline in the number of unemployed Americans was due to a decrease in in the size of the labor force. Joblessness consequently remains a serious economic and social problem.

“December was the 51st-straight month in which the United States experienced net job growth,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Over the year, the economy netted an average of 246,000 jobs per month, a pace that has mitigated but has not undone the damage inflicted to the labor market by the last recession.”

In December, the nation’s employers added 252,000 more payroll jobs than they cut. Some 95 percent of the gain originated in the private sector (+240,000), while public employers added 12,000 more positions than they cut. Within the private sector, payroll levels increased the most in the professional and business services sector (+52,000, with 67.7 percent of the gain occurring in the administrative and waste services subsector), followed by the construction and education and health services sectors (both +48,000). Payroll levels in all other major industry groups rose in December or essentially held steady.

Additionally, the payroll employment numbers for October and November underwent revisions; with the updates, the economy netted 614,000 jobs over those two months, not the 564,000 positions previously reported. With those changes, the average pace of monthly job growth in the United States recorded over the past year rose to 246,000.

“The United States has experienced steady job growth for over four years, but the pace of growth has been modest relative to the country’s needs,” noted Quinterno. “While the United States has more payroll jobs than it did in December 2007, the current average monthly rate of job growth is insufficient to close the jobs gap caused by the recession—a gap now estimated at 5.6 million jobs—anytime soon.”

Data from the household survey offered mixed news about the health of the United States’ labor market. In December, the number of Americans who were employed increased by 111,000 persons (+0.1 percent). At the same time, the overall size of the labor force decreased by 273,000 persons (-0.2 percent) between November and December. Meanwhile, the share of working-age Americans participating in the labor force fell in December, while the share of working-age Americans with a job was unchanged.

In December, 8.7 million Americans were unemployed (5.6 percent), down 4.2 percent from November. Another 6.8 million individuals worked part time despite preferring full-time positions, and an additional 740,000 individuals (not seasonally adjusted) were so discouraged about their job prospects that they had stopped searching for work altogether. Those persons were part of a larger population of 2.3 million Americans who were marginally attached to the labor force.

Compared to a year ago, 2.8 million more Americans were working in December, and 1.7 million fewer persons were unemployed. At the same time, the share of the working-age population with a job (59.2 percent) remained at a depressed level, while the share of the population that was participating in the labor force fell to 62.7 percent from 62.8 percent.

Last month, the unemployment rate was higher for adult male workers than adult female workers (5.3 percent versus 5 percent). Unemployment rates were higher among Black (10.4 percent) and Hispanic workers (6.5 percent) than among white ones (4.8 percent). The unemployment rate among teenagers was 16.8 percent.

Additionally, 4.7 percent of all veterans were unemployed in December, and the rate among recent veterans (served after September 2001) was 6.9 percent. At the same time, 11.2 percent of Americans with disabilities were jobless and seeking work (not seasonally adjusted).

Jobs remained comparatively hard to find in December. Last month, the underemployment rate equaled 11.2 percent, down from the 13.1 percent rate logged a year ago. Among unemployed workers, 31.9 percent had been jobless for at least six months, as opposed to 37.3 percent a year earlier. And the average spell of unemployment equaled 32.8 weeks, down from 36.8 weeks in December 2013.

In December, the leading cause of unemployment remained a job loss or the completion of a temporary job, which was the reason cited by 49.2 percent of unemployed persons. Another 30.7 percent of unemployed persons were re-entrants to the labor market, while 11 percent were new entrants. Voluntary job leavers accounted for the remaining 9.1 percent of the total.

“The December employment report offered a portrait of a national job market that is improving yet is by no means healed,” observed Quinterno. “Weak labor market conditions, in turn, are preventing American workers from experiencing improvements in their wages and living standards.”