Unemployment Mystery Solved? As Jobless Benefits Expire, More Seeking Part-Time Work
Put simply: take 100,000 new and newly-discovered government jobs, add a modest 100,000 private sector jobs, then–crucially–add 600,000 part-time jobs taken by people suddenly losing their federal extended unemployment benefits, and you suddenly have a near-complete explanation of how the unemployment rate fell dramatically in a near-recession economy.
It’s not that the economy is better–far from it, and not just that government is spinning the data–though it is: it’s simply that federal cash is running out, and incentives matter.
Some of the mysterious drop in the unemployment rate in September–which fell from 8.1% to 7.8%–can be explained by 101,000 new government jobs over the past three months. Some of it can be explained by slow growth in the private sector–though not nearly as much as the Obama administration is falsely claiming. But most of it is accounted for by statistical revisions and a sudden increase of 600,000 part-time jobs. That increase has surprised everyone, but should not have: it is the predicted result of the end of unemployment benefits.