Winter Weather Isn't What's Ailing a Sick Jobs Economy

Amid some awfully wicked weather, the U.S. economy last month eked out a feeble number of new jobs, and hundreds of thousands of Americans stopped looking for work, which paradoxically contributed to a drop in the unemployment rate.

But today's weak report from the Labor Department wasn't the result of a wintry economic cold. Rather, it was just the latest symptom of the long-term labor market affliction that has yet to evolve into a sustainable recovery.

In responding to the news, Austan Goolsbee, the chief economic adviser to President Barack Obama, called the economic trends of recent months "encouraging" but seemed careful to make no positive comment specifically about January.

"The overall trajectory of the economy has improved dramatically over the past two years, but there will surely be bumps in the road ahead," Goolsbee said. "As the administration always stresses, it is important not to read too much into any one monthly report."

Most headlines this morning focused on the fall of the unemployment rate to 9 percent in January from 9.4 percent in December. That's the lowest unemployment rate since April 2009, and would seem to be a pretty welcome development.

But the numbers behind that statistic tell a bit of a different story.

The same household survey showed a steep increase in the number of Americans not counted in the labor force because, though they wanted a job, they had stopped looking for work. About a million of these 2.8 million people were classified as discouraged workers, meaning they stopped seeking a job because they believe no jobs are available for them.

When you're not in the official labor force, you aren't counted as unemployed. So the unemployment rate was calculated from a smaller pool of current and potential workers.

Moreover, the Bureau of Labor Statistics, in an annual adjustment of its data to new population estimates, significantly lowered the total number of Americans counted in the civilian labor force for December, skewing month-to-month comparisons with January.

Another important number in today's report is both statistically more concrete and economically more grim.

American nonfarm payrolls increased by just a paltry 36,000 jobs in January. That's far short of the job-creation pace needed to absorb graduates and other new entrants to the labor market -- up to 200,000 a month -- let alone put back to work the millions of Americans who lost their job in the 2008-2009 recession.

More than 6.2 million of the officially unemployed have been out of work for half a year or longer.

Manufacturers, especially producers of durable goods such as cars, metal products, machinery and computers, were hiring, creating a net 49,000 jobs. Retailers added workers as well. But construction employment continued to tumble amid the weak housing and commercial real estate markets, while municipalities and other local government entities slashed their payrolls once again.

With historically harsh snowstorms snarling travel and daily life in much of the U.S., some observers were quick to blame the weather for such a weak month of employment activity.

Goolsbee, the head of the White House Council of Economic Advisers, said "severe weather in some parts of the country may have impacted employment and hours in some industries."

In online headlines following the report, Bloomberg had "U.S. Jobless Rate Tumbles to 9% as Storms Limit Gain in Payrolls to 36,000"; The Wall Street Journal said, "U.S. Adds Few Jobs Amid Bad Weather"; and The New York Times declared, "Weather Is a Factor in U.S. Job Growth."

Maybe. But maybe not. The Bureau of Labor Statistics threw up its hands at the question.

In a note attached to today's numbers, the BLS noted that weather is likely to have more of an impact on the number of hours worked than on employment itself, especially since employees are measured by the pay periods -- often two weeks long -- that they are included on payrolls. And even if employees are paid for just one hour of that period, they're counted as employed.

"While some persons may be off payrolls during the pay period due to severe weather," the BLS said, "others, such as those dealing with cleanup and repair activities, may be added to payrolls."