This past week there were 381,000 people filing unemployment claims for the first time. These individuals are now among that masses of the unemployed that will remain there until either gain employment OR they exhaust the entirety of their unemployment benefits. However, take a look at the individuals that have abandoned the search for work because they believe that no job is available. At this point these individuals are classified as the “discouraged “ where they are no longer counted. This is the category that tells us a little different story than the initial claims number.
A discouraged worker is a person of legal employment age who is not actively seeking employment or who does not find employment after long-term unemployment. In other words, even if a person is still looking actively for a job, that person may have fallen out of the core statistics of unemployment rate after long-term unemployment and is therefore by default classified as “discouraged” (since the person does not appear in the core statistics of unemployment rate).
While the “initial claims” number has been falling the number of individuals that have given up looking for work has been on the rise climbing from a low during May of 883,000 to 1,096,000 in November. This goes a long way to explain why the number of individuals that have fallen into uncounted masses have just reached a new historical record of 86,558,000 individuals with an increase of 487,000 in the month of November alone. If we subtract out the entire estimated growth of the population for the month of November (roughly 200,000) that means that roughly 287,000 individuals fell off the employment rolls in one month. This is a large reason that we saw the “official” unemployment rate fall to 8.6% in the most recent reporting period.
Keeping a perspective on the broader picture will prove to be much more useful.