Is The Jobs Outlook Really Improving?

The November employment report was a cause for celebration. The headline number is the drop in the nation's stubborn unemployment rate from 9.0 percent to 8.6 percent.

The most significant aspect of the report may be its psychological effect. An 8.6 percent unemployment rate, while still bad, sounds a whole lot better than 9.0 percent of the workforce being out of work.

But with a significant drop in the jobless rate in just one month, you might expect a huge increase in the number of people who were hired last month. That simply didn't happen.

The Labor Department reports the economy produced 140,000 new private sector jobs last month. The economy needs to produce more than that on a consistent basis to truly push the jobless rate down. So what's behind November's big drop?

"Some of the decline came from a large drop in the labor force and that is not a sign of growing confidence that jobs are available," said economist Joel Naroff, of Naroff Economic Advisors.

Fewer jobseekers

A drop in the labor force means that, in November, fewer people were looking for jobs. It could mean that some have become discouraged and have given up on finding employment. It could mean more people have started their own businesses. Likely, it's a combination of the two.

So, while the November report by no means suggests a recovery in the jobs market, the trend continues to be encouraging.

"All said, this is a good report that holds out hope for better things to come," Naroff said.

In a weak job market many people decide to go into business for themselves. Many successful businesses have started that way, but many more have been scammed by work at home schemes. The Federal Trade Commission last week approved changes to its Business Opportunity Rule to give consumers more information when they are offered work at home business opportunities.

Potential entrepreneurs should guard against unrealistic expectations and be very wary of a promoter who makes guarantees.