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Friday’s US jobs report had a huge surprise with a massive drop in the unemployment rate to 4.6%, the lowest since August 2007.
Despite that good news, the details of the report show that it’s still tough out there for those who are unemployed.
For one thing, people who are out of work have on average been without a job for a pretty long time. The average length of unemployment as of November was 26.3 weeks. This tied with September 2015 for the least time since August 2009, but it is still much higher than in August 2007, the most recent time unemployment was this low, when the average length of unemployment was just 17 weeks.
Additionally, as noted on Twitter by Jed Kolko, the chief economist for Indeed, the percentage of workers who have been out of a job for six months or more sits at 24.8% of all unemployed. This is solid for this cycle, the lowest figure since March 2009, but again it is well above the same number when the unemployment rate was most recently at 4.6%. In August 2007, the percentage was just 17.5%.
This time around, firms have said that as the labor market has improved they have struggled to find workers who have the skills needed to fill their roles (the so-called skills gap). Essentially, the workers who are not yet employed lack either the education or the technical training to fill the positions businesses need.
To that end, the unemployment rate for Americans who have less than a high-school diploma and are over 25 (so unlikely to be in college) is still well above its August 2007 level at 7.9% – nine years ago it was 6.5%.
So yes, the labor market is approaching the strength it had before the recession, and there is plenty to be happy about in the most recent jobs report. But, for those who still find themselves out of work, the American job market isn’t quite fixed yet.