Source: U.S. National Archives. 

The employment news of this week is full of mixed messages. Mainstream media might be celebrating the U.S.' lowest unemployment rate since 2008, but don't jump for job joy, yet. Here's what you need to know.

Beyond unemployment
The big unemployment news of the week came in the form of the Labor Department's October employment report. From a Great Recession high of 10% in 2009, the unemployment rate dropped to just 5.8%, its lowest reading in over six years.

US Unemployment Rate Chart

But this economic recovery is unlike any we've experienced. The usual rhythm goes something like this: stock markets rebound, economic growth rebounds, labor markets rebound.

This time, the stock market and economy are recovering well, but underlying labor market indicators paint a darker picture than the unemployment rate reveals.

Perhaps most telling is the Labor Department's "U-6" rate, which expands its definition to those who aren't currently looking for work, but want a job and have sought employment in the past year. This "underemployment rate" is at 11.5%, and points to a larger labor force that is down on its luck and has nearly given up. While a 5.8% unemployment rate represents a 17% drop from the year-ago number, underemployment has declined more slowly by 13%.

The chart below shows that the "employment gap" between the U-6 rate and unemployment rate is wider than it was before the global financial crisis. In short, employment ain't what it used to be.

US Unemployment Rate Chart

Some positive productive news
One major theory for the slow labor market recovery is that companies simply don't need as many employees as they once did. The Great Recession provided a payroll reckoning, and corporations have made do with smaller workforces. Employment news this week supports that idea -- but with a silver lining.

Third-quarter nonfarm productivity jumped a seasonally adjusted 2%, quarter over quarter, well beyond analysts' 1.5% estimate . At the same time, unit labor costs edged up 0.3%. That means, in general, corporations enjoyed a major productivity boost at a relatively small cost increase.

Source: Wikimedia Commons, Phasmatisnox. 

This opens up future opportunities for pay raises and expanded employment. If current workers continue to boost productivity, that could mean pay raises. If companies are looking to expand, that means more employment for more production.

Although there's no telling which of these options companies will choose, fresh jobless claims numbers point to the latter. Four-week average new jobless claims ending Nov. 1 hit a 14-year low, and a 14-year low for continuing claims also provides some evidence that longer-term unemployment is on the retreat.

Foolish final word
The Great Recession has not evolved into a great labor market recovery. The unemployment rate isn't the indicator it used to be, and investors need to dive deeper to understand Mr. Market's mood. Other metrics point to positive movement, but the labor market recovery road is rockier than it has ever been before.