- A job seeker fills out an application at a Chicago job fair. It’s now rare, rather that common, for unemployed Americans to get benefit checks.
- M. SPENCER GREEN/ASSOCIATED PRESS
The number of unemployed Americans dipped below eight million last month for the first time since 2008–but that figure doesn’t entirely reflect job growth.
Unemployment dropped to a new low the same month that 350,000 Americans exited the labor force, the Labor Department said Friday. The civilian labor force has shrunk three of the past four months since touching a record high in May.
One explanation for the trend is that Americans out of work for an extended period of time are giving up looking for jobs. The long-term jobless drop out of the labor force at a faster pace than those with shorter spells of unemployment, said Claire McKenna, policy analyst at the National Employment Law Project, an organization that advocates on behalf of the unemployed.
“The headline numbers are masking other vulnerabilities in the job market,” she said.
Why are workers leaving the labor force? It could be because relatively few unemployed are receiving jobless benefits. The number of Americans receiving ongoing unemployment benefits touched a 15-year low last month.
Those receiving government payments last month represented less than 28% of all unemployed Americans, according to an analysis of Labor Department data. That figure is down from 31% a year earlier. And it’s well below the 67% who received the assistance in September 2010, when emergency federal programs extended benefits beyond the 26 weeks granted in most states, to as long as 99 weeks.
The emergency programs expired at the end of 2013, causing the share of beneficiaries to plummet. What’s more, several states, including Florida and Missouri, limited state benefit payments to less the six months in recent years.
When benefits expire, unemployed workers frequently face two likely outcomes: They accept lower-paying work or they drop out of the labor force. Both choices were common among those who lost benefits in North Carolina in 2013.
Those who drop out might have found that it makes financial sense to retire, return to school, stay at home to care for children or older adults, or seek out other forms of government assistance. Each of those choices could remove a person from the labor force. The labor-force participation rate has been trending at the lowest levels since the 1970s.
The bulk of jobless claims are funded by the states. The federal government typically only extends benefits in the wake of recessions. Otherwise, federal payments are limited to programs for newly discharged veterans and federal employees.
In 12 states, fewer than one in five unemployed people receive jobless benefits, according to National Employment Law Project data.
An analysis from the National Employment Law Project published earlier this year showed the share of unemployed receiving benefits touched the lowest level on records back to 1972. The latest figures from the Labor Department show that fraction has stabilized this year and edged up slightly because the total number of unemployed fell.
Related Reading:
Continuing Jobless Claims Near a Low, and That May Not Be Good
Global Turmoil Saps U.S. Job Growth
Economists React to the September Jobs Report: ‘Nothing Good to See Here’
The September Jobs Report in 11 Charts
Myth or Fact? How Some Jobs-Report Analysis Goes Wrong
from Real Time Economics http://ift.tt/1L1LI77
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