Unemployment

Unemployment Rate Steady, but Labor Force Participation Falls Again

On Friday, the BLS released its monthly jobs report. The good news is that the unemployment stayed low at the low rate of 5.1 percent. 

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However, the results regarding the labor force participation rate (LFPR) and the number of jobs added are not as positive. Labor force participation fell to 62.4% - the lowest rate since October 1977. So there are still millions of workers sitting on the sidelines in the U.S. economy.

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To understand just how low this rate is, consider that the LFPR has not been lower since women entered the labor force en masse in the 1960s and 1970s.  To see this, let's look at the LFPR for men only (graphed below).  The LFPR for men has not been lower since we began keeping records (1948).  In fact, I would guess that the only era in U.S. history when this could possibly have been lower would be the Great Depression era - too bad we don't have that data.  

Male LFPR

Finally, the economy only added 142,000 jobs in the last month. This is low compared to both the current years' average of 198,000 and as well as 2014's average of 260,000.

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Another reason economists are less enthusiastic about this report is that the number of jobs added for July and August is now revised downward - with 60,000 jobs added less than reporter earlier.

 


More Jobs Growth in July

The July jobs report from the BLS showed change in the unemployment rate (5.3%) and labor force participation rate (62.6%).  The unemployment rate since 2004 is plotted below:

 Unemployment July 2015

The big positive news is the estimate of 215,000 new jobs added in the economy overall.  This continues three straight months of more than 200,000 new jobs.

Payroll July 2015

One last trend to watch:  although the long run trend for the U.S. economy is increasing jobs in the service sector along with relative declines in manufacturing, the July report estimates increases in manufacturing jobs.  The net change of employment opportunities in manufacturing +15,000, up from just +2,000 the month before.


Promising Jobs Report

The economy added 223,000 new jobs in April, up from 85,000 in March. Today's BLS jobs report also estimates the unemployment rate down to 5.4%, the lowest level since May 2008.  Keep in mind, the unemployment rate was 6.2% just a year ago.
Unemplyment april 2015
 
You may wonder why the employment data seems to relay good news while recent GDP growth has been weak.  One possibility is that the Advance Estimate of GDP growth in the first quarter will be revised upward when we are able to evaluate a more complete data set.  Another possibility is that the employment figures will be revised downward.  In fact, in this current report, the jobs growth for March has been revised downward to just 85,000 (from the original estimate of 126,000). 
 Payroll april 2015
Just like last month, the employment in oil related activities continued to fall. Among the new jobs 45,000 were added by the construction industry. Over the past 12 months, the industry added 280,000 jobs. This shows signs of recovery after the housing bubble in 2006.

Unemployment Rate Steady but Job Losses in Oil Extraction

The  unemployment rate in remained steady at 5.5% in March.  The graph below shows the steady decline over the past year, falling from  6.6% one year ago.  The number of long-term unemployed also stayed constant in March. However, this number decreased by 1.1 million over the past year.

Unemployment rate mar 2015

Jobs growth did slow in March, with just 126,000 new jobs. This is down from an average of 269,000 new jobs per month over the past twelve months.

Nonfarm payroll mar 2015

There is at least one very good economics lesson in this report:  Employment in mining actually fell by 11,000 jobs in March.  The BLS report states that the employment declines "were concentrated in support activities for mining, which includes support for oil and gas extraction."  Thus the lost jobs are a direct result of the falling gasoline prices over the first few months of this year. 

 

 

 

 

 

 

 

 

 


A Great Jobs Report along with a Great Teaching Lesson

The latest jobs report from the BLS offers a great teaching lesson about how the unemployment rate is calculated.  Here's why: it is one of the best jobs reports we've had in a long time even though the unemployment rate actually went up.

First, notice the 257,000 new jobs created in January.  As the graph below shows, we are now working on almost 5 years straight of positive jobs growth, with 3.2 million new jobs in the past twelve months alone.

Employ0115
 

The second piece of good news is the increase in the labor force participation rate (LFPR) to 62.9 percent.  And while labor force participation is still at historically low levels (see graph below), it seems possible that the downward trend has finally reversed as the economy is picking up steam.

Lfpr0115

With all this good news, why did the unemployment rate actually rise to 5.7% in January?  It rose because it is calculated as the portion of the labor force that is unemployed.  The labor force grew by over one million people in January.  And while about one-fourth (257,000) of these found jobs, the others did not, and so the unemployment rate increased.

Unemp0115

This tick up in the unemployment rate should not be seen as bad news.  In the long run, we want the economy to be producing lots of jobs - jobs that draw people back into the labor force from disability, continued education, and perhaps even retirement.


Jobs Growth Continues

The U.S. economy added 321,000 new jobs in november, extending the streak of positive jobs growth to fifty straight months.  So far in 2014, nonfarm employment has grown by 2.65 million jobs or 221,000 jobs per month.

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As they are studying for finals, students might like to know which subjects relate to industries that have recently experienced significant jobs growth.  For example, 86,000 jobs were added in professional and business services in November alone, while the previous 12 month average was 57,000 jobs per month. Digging further, there were 16,000 in accounting and bookkeeping alone. So any students struggling to find incentives to study for accounting exams need just consider the job prospects waiting for them.  Another career path to consider might be health care, which added 37,200 jobs in November.

Unfortunately, all this jobs growth did not reduce the unemployment rate, which remained steady at 5.8 percent.

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Another Good Jobs Report

This morning, the BLS released the Employment Situation report for October and the news is very good.  The unemployment rate is now back to 5.8% for the first time since July 2008. 

Unemp1014

In addition, there were 214,000 new jobs added in October.  The economy has added more thatn 200,000 jobs per month for nine straight months now.  In 2014, we are averaging 229,000 new jobs per month.  That is real recovery.

Employ1014

 


Labor Force Participation Rate Keeps Falling

I've blogged about this before (see here), but the labor force participation rate (LFPR) just keeps falling.  Nobody sees this as positive news - more and more U.S. workers are sitting on the sidelines.  The latest jobs report brought the good news of a falling unemployment rate, but part of this is because workers are leaving the labor force.  As the graph below shows, the overall LFPR in the U.S. is now down to 62.7 percent, which is the lowest it has been since many women entered the labor force in the 1960s and 70s.  

LFPR
 
One way to clarify the magnitude of this decline is to focus on the LFPR for men only.  This has steadily fallen from almost 90% in 1948 to just 69.1% currently (see the graph below).
 
LFPRmen

Also, let's not conclude that this is all due to the aging of the baby boomers.  As Michael Strain recently noted in a series of tweets (here is one), the LFPR is declining even among those aged 25-54.  The LFPR for this age group is plotted below.
 
LFPRall
All of this means that the economy is not as healthy as we would like and that part of the reason why the unemployment rate is dropping is that people continue to leave the labor force.
 

Unemployment Declines to Lowest Level since 2008

The unemployment rate dropped to 5.9 percent in September, the lowest level since July 2008.  The last time our unemployment rate was below 6 percent, the economy was in the free fall of the Great Recession.   

Unemp1014

The drop in unemployment was driven by strong jobs growth, with 248 thousand jobs added to nonfarm payrolls.  To understand just how strong this is, we can compare this to average job growth over the past five years, which was 154 thousand new jobs per month.

Newjobs0914

In addition to these new September jobs, there were revisions to earlier estimates of nonfarm employment: July was revised up by 31 thousand and August by 38 thousand jobs.

Finally, students may be interested to know that employment in "food services and drinking places" increased by 20,000 in September and 290,000 over the past year.