Unemployment Rates Drop: Is it Due to Increased Job Creation or More Workers Dropping Out of Labor Market?

By Natasha L. Foreman, MBA

The debate continues about the unemployment rate, job creation, and the potential boost in our nation’s economy. The Los Angeles Times shares all sides of the debate in last Saturday’s business section.

Although the national unemployment rate is currently at 8.1% (which is almost double in Black and Brown communities) the L.A. Times reported that this rate is not solely because more jobs are being secured by workers —since only 115,000 jobs were added in April (after winter gains of an average of $252,000 jobs December through February)– but rather because more people are discouraged and dropping out of the labor market.

Dean Baker, co-director of the Center for Economic and Policy Research in Washington was reported as telling the L.A. Times that workers are dropping out of the labor market because they no longer believe that there are jobs out there for them. In April the numbers shrank by 342,000 workers. That’s 342,000 that are reported to have lost hope in securing a job.

President Obama sees and reports things differently and more optimistically. He reminded people in his speech last Friday at Washington-Lee High School in Arlington, Virginia, that we are surviving the worst economic crisis since the Great Depression, have created more than 4.2 million jobs within the last 26 months, and 1.6 million of those jobs were created just within the last 6 months.

Obama’s chief economic advisor, Alan Krueger told the L.A. Times that the jobless rate fell a full percentage point since last August, and that nearly three-quarters of that drop was due to increased employment. Dean Baker however said that some of the three-quarters was attributable to adjustments in the population.

Analysts claim that the warm winter weather we experienced across the nation has impacted the reported rates of job growth, as certain industries, such as construction—that were booming in December and January, have since seen no increase in jobs.

However, car sales are strong, manufacturing continues to perform well, there is growth in the demand for growth, consumer spending is up, and there is an improvement in the housing market that once was severely depressed.

The L.A. Times makes a point of reminding and educating readers that our country’s economy is vulnerable to various “shocks” such as high oil prices, China’s slowed-down economy, and the debt-strained problems of Europe. When the rest of the world is suffering, our country is hit hard also; and vice versa. We’re literally in this together.

Let’s also not forget that more than 90% of the companies in our country are small business enterprises, with less than 200 employees, yet maybe 90% of job seekers are applying mostly to large corporations—less than 10% of the businesses in the U.S.

Who’s helping to equip these small businesses with the resources to hire more employees?

Who’s reminding and educating job seekers about employment opportunities with small businesses?

Who’s bridging the gap?

We must realize that our economy is impacted by other world economies and “shocks”. We must focus more on the things we’re for and less on what we’re against, and then help to bring about a progressive movement towards solution rather than allow a spiraling effect that will lead to ultimate failure.

We should also be grateful for our country and the numerous resources here. Let’s consider if we lived in Liberia where the unemployment rate is a staggering 85%. What if that was our reality?

Let’s look for solutions rather than people to blame. Let’s look for business opportunities and leverage our strengths, rather than examples of our weaknesses and failures.

What can we do individually and collectively to bring about positive change and to be the change we want to see in our nation, and in the world?

What can you do to help with unemployment in the United States?

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Source: Don Lee. Los Angeles Times. Job weakness feeds fear of a slowdown. Business section. B1, B4. Saturday, May 5, 2012.

Copyright 2012. Natasha L. Foreman. Foreman & Associates, LLC. All Rights Reserved.

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