The economy added 203,000 jobs in November, pushing the unemployment rate down to 7.0%—the lowest level in five years.
The unemployment rate’s drop from 7.3% to 7.0% was particularly dramatic because of the impact of the government shutdown, as temporarily furloughed workers who counted as unemployed in October returned to work last month.
But November’s jobs report also shows the labor market is starting to pick up steam in more far-reaching ways. Much of the job growth in recent months has been fueled by retail and other low-wage industries.
By contrast, the industries that added the most jobs in November are comparatively higher-paying: transportation, health care, and manufacturing. The number of people working part-time because their hours had been cut back or because they couldn’t find full-time work also fell by 331,000 to 7.7 million.
The jobs numbers are under particular scrutiny as the Federal Reserve mulls when to start ending its stimulus bond-buying program, which has helped keep interest rates extraordinarily low. In June, outgoing Federal Reserve Chairman Ben Bernanke said the unemployment rate “would likely be in the vicinity of 7%” when the program finally ends.
But the timing of the Fed’s pullback will also depend on how Congress manages to handle its next budget deadline, and whether it can finally get past the dysfunction and brinksmanship that has hurt economic confidence for much of the past two and a half years. The encouraging jobs numbers could also make it harder for Democrats to secure an extension of federal unemployment insurance, which expires at the end of this month, as Republicans have opposed continuing the program on the grounds that the economy has sufficiently improved. The federal unemployment benefits, however, only go to jobless Americans whose state benefits have expired—those, for the most part, who have been unemployed for longer than 26 weeks. And that group continues to face huge obstacles in re-entering the labor market. There are still more than 4 million Americans who are long-term unemployed, and that number barely changed in November.
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