The significant decline in the unemployment rate, from 8.1 to 7.8 percent, is certainly the big story in the September jobs report.  It happened in spite of a sizable increase in the labor force, the first in three months, and a modest uptick in the labor force participation rate.  Against the backdrop of persistently slow job growth, how did we manage such an impressive one-month decline in the jobless rate to the lowest level since January 2009?

Dissecting by educational attainment strata partially solves the mystery. Workers with less than a high school diploma saw their unemployment rate fall from 12.0 percent to 11.3 percent.  This was, by far, the largest fall of any educational attainment group in September and the second sizable monthly decline for this cohort.  The unemployment rates for all other educational levels, including those with a B.A. degree and higher, saw little or no change between August and September.  Add to this a large increase in those working part-time for economic reasons and you have to ask: Can we attribute at least a part of the September decline in the unemployment rate to those without a high school education taking part-time jobs?

Unfortunately, a welcome fall in low-educated joblessness, partially through part-time job gains, doesn’t do much to alleviate long-term unemployment.  The percent of unemployed workers who have been looking for work for 27 weeks or more actually rose a bit to 40.1 in September from 40.0 in August.  Disturbingly, the average duration of unemployment saw a second monthly increase from 39.2 to 39.8 weeks. We had been making some progress but since May the data on unemployment duration have been discouraging.

We simply need stronger job growth.  September's net gain of 114,000 in total non-farm employment is inadequate, below what is needed to absorb new entrants to the labor force and less than half of what is needed on a consistent basis to really suggest a better day for the labor market.  The manufacturing sector, whose employment increases had been a modest bright spot, experienced its second monthly decline in jobs, clearly impacted by a difficult global slowdown.  Anyone who believes that the problems in Europe and the developing world are alien to U.S. interests should reconsider. 

Job growth remains painfully slow and the duration of unemployment remains historically high.  Workers without an education need to find factory jobs that have a future, not part-time jobs.  Our challenges remain well ahead of us.