The unemployment rate has steadily been dropping over the last five weeks, but may not be for the reason you think. According to the Department of Labor, weekly applications for unemployment benefits dropped 13,000 to a seasonally adjusted 348,00 as reported February 16, 2012.
The Huffington Post reports that the decline may indicate the companies are laying off fewer workers, and that factories are hiring more people to meet increasing demand of manufacturing goods. While statistics indicate that manufacturers did add 50,000 workers to the ranks last year, does this increase in jobs fully explain why the unemployment rate has gone down?
Perhaps something more sinister, or at least more depressing, is going on in the American economy. The government only considers the unemployment rate of people who actively look for paid work in the prior four weeks. It is certainly plausible that people who have given up may affect the unemployment rate. In December 2011, MarketWatch.com published a report that in November 2011 a whopping 315,000 people stopped actively looking for jobs. Though similar numbers are not available for January 2012, sociologically speaking, there is a strong possibility that many people have given up their job search.
As anyone who has been laid off in the Great Recession knows, people tend to try and find similar work on a similar pay grade as their previous job. Unfortunately, given the state of the economy of the past four years, beggars simply cannot be choosers. People who had been employed as vice presidents or high-level managers may try to hold out for a similar position and not take the McDonald’s job application until it is absolutely financially necessary.
Whether the unemployment is dropping because America is crawling out of the Great Recession, or whether people have given up on their dream jobs, a 8.3% unemployment is still high. Fortunately, the drop rate has been consistently decreasing but for now it remains to be seen how many more percentage points the unemployment rate will drop this quarter.