Another take on 9.9% Unemployment

This week we saw the April unemployment numbers released, and they ticked up from 9.7% to 9.9%, despite the addition of 290k new jobs.

President Obama says this is progress, "...the storm is receding and the skies are brightening..." But others point out that without the hiring of people to record the Census, the numbers are a bit lower.

That leaves the question about how, if we added 290k new jobs, did the unemployment rate move *up*? As discussed by Jim Geraghty, "discouraged workers – those who had given up looking for work — are getting off the sidelines."

"Discouraged workers" do not show up in the unemployment rate, so if 100k discouraged workers start looking for work again, it is reflected in the unemployment rate the same as if 100k people had lost their jobs. [This is a good reason to follow the more inclusive U-6 Unemployment Rate, which rose to 17.1% in April]

So, why were all these "discouraged workers" suddenly looking for work again in April, and thus being counted again and raising the rate from 9.7% to 9.9%? Was it an improving jobs market? Perhaps so. But here is another option:

President Obama Signs Unemployment Extension

President Barack Obama has signed a bill extending unemployment benefits through June 2...People who lost out on the additional weeks of benefits after exhausting their state-paid benefits will now be able to reapply and receive those checks retroactively.

So, in the middle of April thousands of discouraged workers qualified for retroactive unemployment benefits that had previously run out? The last time I checked, in order to qualify for benefits, you had to be "actively looking for work". Thus in order to qualify, they have to give up being "discouraged workers", and become "unemployed" again.

So, I would argue that perhaps the reason the unemployment rate went up was that the government handed out more unemployment benefits.

Weird, huh?