|October job creation greater than expected|
|Written by Nick Williams, Daily Vidette Reporter|
|Tuesday, 16 November 2010 22:46|
Approximately 151,000 jobs were created nationwide in October, nearly twice as many than what had been projected.
According to Daniel Rich, professor of economics, there was a clear gain in jobs, but the economy must continue to improve before the unemployment rate will drop significantly.
An increase in retail jobs due to the holiday season is probably part of the gain. However, less than one-fourth of the job growth was in retail. Tens of thousands of new jobs were created last month in health care, restaurants, and business services. Approximately 8,000 jobs were created in computer system design, Rich explained.
“The challenge ahead is substantial. As job prospects improve, individuals sidelined by the recession re-enter to the labor force and the flow of new entrants [including recent graduates] returns to its usual level. Workers become more willing to leave temporary jobs and seek more desirable employment,” Rich said.
There was a drop of over 300,000 jobs last month in the number of involuntary part-time workers. With the creation of new full-time positions, workers can seek more desirable positions which offer consistency and a generally higher pay grade.
This effect adds up to slow movement in the unemployment rate even as employment grows and labor market conditions improve for job seekers, he added.
Rich explained positive indicators for the economy’s strengthening include the ratio of employment to the population increasing.
The number of long-term unemployed – at six months or longer – has declined, so the U.S. has to continue creating long-term full-time jobs so the economy and unemployment can reach a level of stability.
The economy is affected by an incredibly diverse set of variables including the U.S. government.
Congress has to make an important decision regarding tax cuts as a number of tax cuts currently in place will expire at the beginning of 2011.
Paul Folger, assistant professor of political science at Heartland Community College, explained how expectations for the midterm [election] results probably had little impact on businesses creating jobs last month.
“The mantra from the private sector is ‘We want stability.’ Elections by their very nature bring about at least the potential for instability. The business community is most likely happier that the election is over, even more so than one party winning,” Folger said.
Congress is currently debating on whether or not to extend the current tax cuts that expire at the end of this year. These tax cuts passed in 2001 and 2003 under the Bush administration.
President Barack Obama favored allowing these tax cuts to lapse for the highest earning 2 percent of taxpayers.
“The big economic issue is the tax cut. It’s hard to see how one month of good job news will change the core values the parties have over the tax cut issue,” Folger said.
“It is worth noting that the highest income households would receive the middle class and upper middle class tax cuts under all of the proposals,” Rich explained.