This was a very confusing report. The unemployment rate fell dramatically in November. But we're only adding 120,000 jobs a month. How can both things be true at the same time?
One of these days, we'll get a jobs report that clearly marks the turning point in our weak recovery. Today is not that day.
Unemployment fell from to 8.6 percent from 9 percent, its lowest point since March 2009. That's good news. But the economy only added 120,000 jobs in November -- and 220,000 since October -- which is hardly enough to match population growth. That's bad news.
The jobs report is supposed to send a clear signal. Why is it flashing both a green light and a yellow light for U.S. job-seekers?
The first explanation is that unemployment dropped by 0.4% because we had a wild 600,000-person swing in the work force. Half of that swing came from people finding new jobs. Awesome. The other half came from people leaving the labor force to retire or stay at home. Not awesome. The share of the U.S. population that is currently employed is near its lowest mark in 30 years. That's a critical part of our lower jobless rate. If we had the same worker ratio as early 2009, unemployment would be closer to 11%.
But there's another explanation for the dueling jobs figures. They came from different surveys, and one (or both) of them is very wrong.
Why are there two surveys? With 150 million workers in the U.S., it's impossible to measure every hiring and firing perfectly. So the government relies on two imperfect surveys. To get the jobs-added figure, we count hirings and firings on payrolls. This is called the "establishment" survey. To get the unemployment rate and the employment/population rate, the government conducts a formal survey. This is called the "household" survey.
The household survey says we added 300,000 jobs last month. The establishment survey says the private sector added only 140,000 jobs in November. Half of those jobs came from retail (it's shopping season) and health care (which is always growing). Meanwhile, the government lost 20,000 jobs. The result was a 120,000 net gain.
Is 120,000 jobs good or bad? I'll answer in the form of a graph, courtesy of the Hamilton Project. It shows how long it would take to replace all the jobs lost in the Great Recession. If the household survey is right, and we're adding about 300,000 jobs a month, we could be back at full employment around 2017. If the establishment data is right, and we're adding about 120,000 jobs a month, we'll be back at full employment some time between the 2030s and never.