Friday, April 1, 2011

March Unemployment Rate Dips to 8.8% as Labor Force Participation Lacks Any Meaningful Rebound, 216,000 Jobs Created

The first pass a March job gains shows a 216,000 gain: +230,000 in private sector offset by a -14,000 in the public sector.  This is a bit above the ADP report earlier in the week and a bit above economists expectations.

The widely followed unemployment rate ticked down 0.1% to 8.8%.  However, for those who follow this closely we've seen a strange issue the past few years where the labor force participation rate has dramatically dropped so a few million people simply have fallen off the radar.
  • The civilian labor force participation rate held at 64.2%
If the U.S. had a more normal level of labor force participation the unemployment rate would be about 2% higher.  That said, almost everyone only focuses on the headline figure of 8.8% so it's all relative in terms of whether you want reality or not.*  One continues to wonder where these people disappeared to - some proportion have gone back to school, some to welfare, etc but the vast majority just simply seem to have dropped off the map.

*Further, with the adjustment in the 1990s and 2000s as to how the unemployed are measured, the actual figure would be significantly higher if measured as we did it in the 1980s.  Remember, in America if you are not actively seeking work for 4 weeks you no longer count as unemployed.

U-6 which is the broader unemployment rate including marginally attached workers, fell 0.2% to 15.7%.

Average hourly earnings held flat, while the average work week for all workers also stayed flat at 34.3 hours.


All in all an "ok" report; this far into a recovery we still have struggled to find the 300-400K type of job growth month(s) that should have hit a few quarters ago.  Please keep in mind, aside from quantity of jobs (which has been poor in the recovery) is the quality of jobs.  And that has been especially discouraging as many high paying jobs lost in the Great Recession have been replaced with far lower paying jobs - a very lightly discussed fact in the media.  [Feb 3, 2011: CNNMoney - Jobs Coming Back, but the Pay Stinks!]
  • Bernhardt's analysis of the first seven months of 2010 found that 76% of jobs created were in low- to mid-wage industries -- those earning between $8.92 to $15 an hour, well below the national average hourly wage of $22.60.

Full report here.

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