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December has brought a small wave of positive news on the unemployment front--though much of it is better described as "less negative news." Lest we get carried away by dips in the unemployment rate and jobless claims, Economic Policy Institute economist Heidi Shierholz reminds us that the conditions are not ripe for a major shift. Shierholz points to the ratio of job seekers to available jobs, which remains above 4:1. Shierholz: To put this figure in context, it’s useful to note that the highest this ratio ever got in the early 2000s downturn was 2.8-to-1, and in December 2000, the month the JOLTS survey began, the ratio was 1.1-to-1. While the job-seekers ratio has been generally slowly improving since its peak of 6.9-to-1 in the summer of 2009, today’s data release marks two years and 10 months—147 weeks—that the ratio has been above 4-to-1. A job-seekers ratio of more than 4-to-1 means that for more than three out of four unemployed workers, there simply are no jobs. In October, there were 10.6 million more unemployed workers than job openings. Furthermore, the lack of job openings relative to unemployed workers is in no way limited to particular industries such as construction—unemployed workers dramatically outnumber job openings across the board, in every major industry. Read the full post here .

In a post at Vox , Ecole Polytechnique Professor of Economics Pierre Cahuc , and Stéphane Carcillo , Associate Professor of Economics University of Paris, argue that short-time work can be effective in "combating unemployment" during global financial crisis, but that it is not without some problems. They say 25 of 33 OECD countries have used the practice of short-term work schemes: Cahuc and Carcillo write: European countries with widespread and generous short-time compensation experienced a smaller rise in unemployment in the recent recession than those without. The leading example is Germany that makes a particularly intensive use of a short-time work programme (the Kurzarbeit). This success has renewed interest in short-time work. But the idea itself is nothing new. The suggestion that it could be more efficient and more equitable to share jobs with short-time compensation rather than destroying jobs during has been repeatedly put forward by advocates of work-sharing. For instance, Abraham and Houseman (1994) argued that short-time work arrangements can be more equitable since they spread the costs of adjustment more evenly across members of the work force instead of concentrating it on a small number of laid-off workers. But short-time compensation programmes are no panacea. They can induce inefficient reductions in working hours. Moreover, workers in permanent jobs have incentives to support such schemes in recessions in order to protect their jobs. Employers also have incentives to support short-time compensation programmes in countries where stringent job protection induces high firing costs. Therefore, there is a risk attached with using these programmes too intensively. The benefits of insiders can be at the expense of the outsiders whose entry into employment is made even more difficult. Read Is short-time work a good method to keep unemployment down? here .

The Labor Department will release monthly unemployment data tomorrow. But there were some bad figures released today on jobless claims. From the Labor Department's news release: In the week ending July 31, the advance figure for seasonally adjusted initial claims was 479,000, an increase of 19,000 from the previous week's revised figure of 460,000. The 4-week moving average was 458,500, an increase of 5,250 from the previous week's revised average of 453,250. The advance seasonally adjusted insured unemployment rate was 3.6 percent for the week ending July 24, unchanged from the prior week's unrevised rate of 3.6 percent. Bloomberg 's Bob Willis said the increase was "unexpected" : Economists forecast claims would fall to 455,000, according to the median of 43 projections. Estimates ranged from 444,000 to 470,000. The government revised the prior week's total to 460,000 from a previously reported 457,000. There were no special factors influencing last week's report, a Labor Department spokesman told reporters are the figures were being distributed. The timing of auto plant retooling shutdowns, which caused claims to gyrate last month, are probably no longer affecting the data, he said. The four-week moving average of claims, a less-volatile measure, increased to 458,500 last week from 453,250, today's report showed. Read the Labor Department's report here .

Not only do more people lose their jobs during a recession, but the duration of unemployment also always increases, according to Rob Valletta and Katherine Kuang of the San Francisco Fed . The number of Americans unemployed for six months or longer reached an all-time high last year. And Valletta and Kuang have analyzed whether the availability of unemployment insurance has a significant impact on how long people remain unemployed. For our specific test, we look at the increase in unemployment duration observed as the UI extensions were introduced and renewed in 2008 and 2009. We use the "expected unemployment duration" concept from Valletta (2005), which yields a monthly measure of the typical completed duration of unemployment for an individual who becomes unemployed in a particular month, based on the distribution of individual unemployment spells for the current and prior months. This measure more accurately reflects the overall duration of unemployment spells and changes in duration over time than do the average and median duration series published by the BLS, which are tallied from incomplete spells measured at the time each survey is conducted. Figure 2 Unemployment duration by reason (through December 2009, three-month moving average) Note: Authors' calculations from CPS microdata (seasonally adjusted). The solid vertical line indicates the recession start; the dashed lines indicate effective dates for UI extensions (through 12/09). Figure 2 displays the resulting unemployment duration series for job losers and leavers/entrants from 2005 through the end of 2009. The vertical lines identify the start of the recession and the dates for the initiation and renewal of the extended UI benefits programs. Unemployment duration rose slightly in the early phase of the recession and then increased sharply after extended UI benefits became available, reaching a high of about 35 weeks in mid-2009 before declining back to about 30 weeks by the end of the year. Notably, the increase in expected duration was similar for job losers, the group that is eligible for UI benefits, and leavers and entrants, who are ineligible. The similar increase in duration for the UI eligible and ineligible groups suggests that extended UI had only a limited impact on unemployment duration. As of the fourth quarter of 2009, the expected duration of unemployment had risen about 18.7 weeks for job losers and about 17.1 weeks for leavers and entrants, using the years 2006-2007 as a baseline. The differential increase of 1.6 weeks for job losers is the presumed impact of extended UI benefits on unemployment duration. It is straightforward to translate this increase in unemployment duration into an effect on the unemployment rate, based on their proportional relationship and adjusted for the share of job losers in overall unemployment, which was about 67% in December 2009. The implied increase in the unemployment rate is quite small, slightly less than 0.4 percentage point, indicating that without UI extensions, the measured unemployment rate would have been 9.6% in December 2009 rather than the observed 10.0%. Read Extended Unemployment and UI Benefits here .

Mark Thoma stresses the importance of automatic stabilizers--food stamps and other "taxes and transfers" that "automatically change with changes in economic conditions in a way that dampens economic cycles." Over at Moneywatch , Thoma writes that these stabilizers are key in mitigating the impact of economic downturns. And yet we have spent so little time discussing them during the past two years, largely because, Thoma writes "automatic stabilizers bypass this difficulty by doing exactly what their name implies, they kick in automatically without the need for Congressional action." We need to do a careful and thorough assessment of the strengths and weaknesses of existing automatic stabilizers, to identify missing pieces and extraneous parts, and we need to design new stabilizers that can improve our ability to smooth fluctuations in the economy (e.g. payroll taxes that decline automatically when conditions deteriorate, investment tax credits that vary countercyclically, or a continuously updated list of infrastructure projects that can be started ahead of schedule or brought online anew if the economy goes into recession). Then we need to begin the difficult political process of getting the needed change through Congress and signed into law before the next crisis hits. Read The Importance of Automatic Stabilizers here .