Biggest monthly job increase in four years, but unemployment rises to 9.9 percent 

Analysts only expected to see about 160,000 jobs added in April, but the jobs numbers were a pleasant surprise — 290,000 jobs were added, the largest monthly increase in over four years.

However, that number isn’t a big a cause for celebration as it looks. For one thing, that includes 66,000 temporary Census jobs in April. For  another, forecasters also expected the unemployment rate to remain unchanged at 9.7 percent. Instead, it actually rose to 9.9 percent.

The reason for the rise in unemployment is that those 290,000 net new jobs were swallowed up by the estimated 805,000 workers who actively began seeking jobs again. The White House suggests that this is positive news: “Such a rise in the labor force often occurs in recoveries as workers who had dropped out of the labor force are drawn back in by improved employment opportunities.”

But it might have just as much to do with the number of people whose unemployment benefits are suddenly running out. Surely many beneficiaries have been looking for jobs all along, but the large uptick in the labor force might be a sign that many were not looking or had given up. Hundreds of thousands of people, after collecting unemployment for as long as 99 weeks (nearly two years), either got their last checks in April or can see the end coming soon and are jumping back into the market again.

Bloomberg reports that more than 1 million will lose their benefits in the coming months. Although the numbers for last month aren’t available, in March 409,193 Americans received their last “Tier Four” unemployment check. That number will probably be higher for April. An entire “shadow labor force” of newly active job-seekers could keep unemployment high all summer even if job recovery picks up.

A few more cautionary notes against irrational exuberance:

First, House Republican Whip Eric Cantor notes that “even if the economy added 250,000 jobs every month, it would take nearly five years to get back to full employment.”

Second, Diana Furchtgott-Roth of the Center for Employment Policy at the Hudson Institute notes that “The percent of the unemployed who were out of work for six months or more rose to 45.9%, the longest since the Bureau of Labor Statistics started keeping track of these data in 1948.”

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Mark Hemingway

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