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The headline numbers show a decent month for the US labor market in February. Nonfarm payrolls rose by 236,000 last month (246,000 in the private sector), the Labor Department said, beating economist expectations of 160,000. And the jobless rate fell to 7.7%, the lowest since December 2008, from 7.9% in January.
Now here’s some of what those headline numbers miss:
1. In January 2009, Team Obama economists predicted that the unemployment rate by 2013 would be 5.1% (and the economy would be booming at 4% annual growth). Heck, even without the stimulus, they thought the jobless rate would be down to 5.5%. That’s a big miss.
2. The labor force participation rate fell again as potential workers stopped looking for work. If the LFP rate was just where it was a year ago, in February 2012, the official unemployment rate would 8.3%. And if the LFP rate was where it was in January 2009, the unemployment rate would be 10.8%. Does the the aging of the US workforce make that 2009 number less relevant? Probably. But have demographics changed that radically over the past 12 months? Doubtful.
3. The February U-6 number, the broadest measure of unemployment and underemployment, was down a tick to 14.3%. This probably gives a better feel for the real state of the labor market.
4. During the past three months, the economy has added an average of 191,000 jobs. At that pace, according to the Jobs Gap calculator from the Hamilton Project, it would take 101 months to return to pre-Great Recession employment levels while also absorbing the people who enter the labor force each month. Oh, and that calculation assumes no recessions between now and late 2021.
5. The share of the unemployed out of work for 27 weeks or longer increased to 40.2% from 38.1% in January.
6. The employment-population ratio is exactly where it was a year ago, at an almost rock-bottom 58.6%.
The bottom line here is that the US labor market is treading water at best, with the falling labor force participation rate number hiding that sorry reality. To get excited about these jobs numbers really is to embrace the slow-growth New Normal reality. The economy continues to grow too slowly to really crank up the American Job Machine. Boosting growth in smart, supply-side way should be the top priority of the White House and Congress.
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