December's Real Unemployment Rate


We knew the news wasn’t good to end the year based on the ADP private-sector jobs report which showed job losses for small and large businesses in December. That set the stage for what was reflected with the government jobs report on Friday.

First, the headline numbers from the jobs report. The unemployment rate was 6.7%, there were -140,000 jobs and positive revisions from previous months totaling 135,000 jobs. The bad news was mitigated by the underestimated jobs added previously almost accounting for the total lost in December, but the bottom line is that for the first time since the spring lockdowns began to be lifted, we had a month of net job loss. The question is simply whether it’s a month outlier or the start of a trend.

Now for the real unemployment rate once underemployed, long-term unemployed, and marginally attached people are accounted for. The actual number is 11.6%. That's unchanged, there are currently 14.1 million people who are long-term unemployed, underemployed, or marginally attached to the workforce which makes up the difference between the base rate of 6.7% and the real rate of 11.6%.

As for Demographics, the unemployment rate was essentially flat for all groups.

Now let's look at money. The average hourly wage rose by 23 cents per hour during the month to $29.81. The average full-time income is currently $53,789, that's a gain of $261 over the prior month.

The news generally continues to be great for those who are full-time employed with wages and hours worked continuing to rise well above a year ago. This continues to be a jobs economy of the haves and have nots. Those who are full-time employed are generally earning more than they ever have, including a near 6% increase in earnings year over year. For those without employment, the competition for employment is the most challenging it’s been in around eight years.

On balance, the job’s report was a bit better than the headlines suggest. The economy is getting its next true test right now with various states and local governments imposing lockdowns.

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