Employment Picture Remains Unclear

By Toni Vranjes

January 7, 2011

The last jobs report for 2010 delivered mixed news: the unemployment rate fell dramatically, but employers created fewer jobs than expected.

The jobless rate dropped from 9.8 percent to 9.4 percent in December, the Labor Department reported today. But payrolls increased by only 103,000 last month, a disappointing number considering that many economists had predicted a gain of 150,000 jobs.

In December, employment rose by 47,000 in the leisure and hospitality sector, while health care added 36,000 jobs.

However, the labor force grew smaller, which contributed to the lower unemployment rate. Last month, 260,000 people dropped out of the workforce, according to the Labor Department.

Meanwhile, the “underemployment rate” fell from 17 percent to 16.7 percent in December. That measure includes part-time workers who would prefer to have full-time jobs, as well as people who have left the workforce.

But more people are joining the ranks of the “long-term unemployed” — those who have been jobless for 27 weeks or longer. The number rose from 6.3 million in November to 6.4 million last month.

The Obama Administration acknowledges that the jobs report is a mixed bag.

“Even though the unemployment rate fell sharply in December, it is still unacceptably high and we need robust employment growth in order to recover from the deep job losses that began over two years ago,” Austan Goolsbee, chair of the White House Council of Economic Advisers, wrote in a blog post.

“The overall trajectory of the economy has improved dramatically since then, but there will surely continue to be bumps in the road ahead,” he added.

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