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Kimberly Amadeo

Unemployment Drops as Discouraged Workers Leave the Labor Force

By December 10, 2012

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Only 146,000 jobs were added in November, less than the 150,000jobs minimum economists say is needed to keep from adding to the jobless problem. Nevertheless, the unemployment rate dropped down to 7.7%. So, is the employment situation improving or not?

Actually, it's just treading water. The total number of those counted as unemployed by the Bureau of Labor Statistics stayed the same at 12 million. The unemployment rate dropped because 542,000 people left the labor force, and were no longer counted as either employed or unemployed.

Why did they leave? A little more than 1160,000 became discouraged at looking for work, and left the labor force. The rest might have left because they went back to school, decided to take care of parent, spouses or other sick family members, or perhaps they retired.


The Employment Report also showed that the jobless rate was not affected by Hurricane Sandy, which severely impacted the East Coast. The BLS said perhaps the impact on employment will show up in the regional and state surveys, released on December 21.

Since so many people left the labor force, it's no surprise that there were 216,000 fewer long-term unemployed than in October., bringing the total to more than4.8 million. These people have been looking for work for six months or more. (Source: BLS, Employment Situation Summary )

The major job gains were in the following sectors:

  • Retail trade -- 52,600.
  • Leisure and hospitality -- 23,000.
  • Health care -- 22,000.
  • Temporary help -- 17,000.
  • Automotive - 9,700.

The losers were not surprising.

  • Construction -- 20,000.
  • Government -- 1,000.

What This Means for You

It's not surprising that job creation picked up in retail and temporary help to support Black Friday and the holiday shopping season. If you are thinking about changing careers or going back to school, look at the areas that keep adding jobs month after month. If you are one of those who left the labor force, share your frustration in What Causes Unemployment?

New! Watch the Video - Understanding the Unemployment Rate

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