The unemployment figures for September were released this morning (5 October 2012), and they are puzzling on the surface. If only 114,000 jobs were created, how could the unemployment rate have dropped from 8.1% to 7.8%? There isn’t a dramatic increase in discouraged workers, which could reduce the rate.
I think I’ve found the answer. The U-6 rate, which includes as “unemployed” all those marginally attached to the labor force (such as discussed workers) and those working part-time for economic reasons. These are people who want a full-time job, but can’t get one. The U-6 rate is unchanged from last month, at 14.7%. All the other numbers are down along with the official unemployment rate. So, the only explanation is that the drop in unemployment is due to people taking part-time jobs.
It’s better to have a part-time job than no job at all. But surely, more than 3 years after the end of the recession, there should be more full-time jobs.
Update: in fact, the number of people employed part-time for economic reasons is up 588,000. So, there you have it.
Update 2: An interesting and plausible theory on why there is such growth in part-time employment at PJ Tatler.