Unemployment Falls to 7.8% For the Right Reasons

One of the complexities of the monthly jobs report is that the unemployment rate can drop for several reasons (or a combination of them).

One is that people who were looking for work unsuccessfully give up. This group is called ‘discouraged workers,’ and when it’s growing, that’s a bad sign for our economy.

One is that the total number of people working drops. This can be neutral — as the elephant-in-the-python that is the Baby Boom hits retirement age, we’d expect the total number of workers to drop, unless immigration booms. Also, there’s a fairly long-time trend of fewer high school and college students working part-time while they go to school. To the extent that’s because they’re too busy with studying and extra-curriculars, not because they can’t find work, that’s also not an economic problem. But a drop in labor force participation can also be worrisome when it’s among people of prime working age, which has been happening during this bad economy.

But today’s unemployment is a drop for the best reason of all — fewer people lost their jobs and more people were hired last month.

There were 468,000 fewer people who were either laid off or had a temp job end compared to August.

And, according to the household survey (see post number one) there were 873,000 more people with jobs in September than in August.

The only fly in the ointment — besides the fact of course that 7.8 percent is still way too high — is that a lot of those new jobs are part-time when folks would prefer full-time.

The unemployment rate is now where it was when Obama took office.

There’s a lot of talk about how this news affects November’s elections, but what it says about ordinary people who have been struggling to re-establish themselves is more important.

We will find out a week from Thursday if Connecticut residents are also getting back to work. Last month’s data suggested things were worse here than in the country as a whole. But the swing was so dramatic, it could be sampling error.