March Job Gains Help Economy, but Don’t Reduce Unemployment Rate

Today’s employment numbers are generally positive, but not all the news is rosy. On the plus side, there was an increase of 162,000 jobs nationally, and almost three-fourths of the increased employment was in the private sector. On the other hand, the unemployment rate was unchanged – holding at 9.7 percent. The latter phenomena seems like a paradox, but is actually quite common during the early stages of an economic recovery, because “discouraged workers” who stop looking for employment during a recession aren’t counted in the unemployment rate. The official ranks of the unemployed grow as those jobless workers begin returning to the workforce and are once again counted as unemployed.

The economic data provide further evidence that the labor market is starting to improve and that the American Recovery and Reinvestment Act enacted in February 2009 is having positive effects. However, we are only just beginning to see a reversal from the net loss of 8.2 million jobs since the recession began in December 2007. (See the chart below from the Center on Budgt and Policy Priorities.)

The stubbornly high unemployment rate reinforces the conclusion that Congress should extend the portions of the Recovery Act providing extra weeks of unemployment insurance and subsidized COBRA health insurance coverage for unemployed workers. Extending those provisions to the end of the year and providing additional fiscal assistance to cash-strapped states are very effective means of stimulating the economy and protecting critical safety net programs. They should be top priorities for Congress when it returns from the current recess.