Unemployment Rate

Unemployment Down to 6.3 Percent as 800,000 Americans Drop Out of Job Market

Good news, bad news

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The headlines say the news is good.

Official unemployment in the U.S. dropped from 6.7 to 6.3 percent, the lowest rate in five years, as 288,000 nonfarm jobs were added, according to the Bureau of Labor Statistics (BLS).

The steep drop in the unemployment rate, however, was a function of more than 800,000 unemployed Americans dropping out of the job-seeking market altogether. Only 62.8 percent of working-age Americans are employed or looking for work, back to lows seen in December.

Some economists say that drop may reflect the end of unemployment benefits for some at the end of last year: no longer receiving benefits, some of the unemployed may no longer be fooling themselves (and BLS survey takers) that they're looking for work.  And the monthly household survey actually found 73,000 jobs were lost last month. The New York Times explains:

It's tempting to try to combine the two surveys into one neat package and claim that the economy added jobs, albeit not enough to bring people back into the labor force. But that's not right. If you believe the household survey, the economy lost jobs. If you believe the business survey–which is much larger than the household survey–job growth was quite strong. They cannot both be right. The Times suggests a wait and see approach for anyone trying to claim the labor market is gaining strength. Job numbers for February and March, incidentally, were revised upward. Prior to the release of the jobs report, economists predicted 211,000 jobs were created last month.

The Wall Street Journal ran some reactions on the numbers from economists from across the spectrum. Some, naturally, dismissed the caution the conflicting numbers should warrant. Via WSJ:

The usual suspects will complain that the decline in the unemployment rate was largely due to a massive 806,000 drop in the labor force, which more than offset a disappointing 73,000 decline in the household measure of employment. But the household figures are notoriously volatile and the labor force had increased by about 1.5 million over the past six months. –Paul Ashworth, Capital Economics

Although the drop in unemployment this month can be explained by the participation rate, the drop in the participation rate merely reversed the rise in the previous three months. For the year to date, the participation rate is flat and the unemployment rate is down another 0.4 points. In short, the trend in employment remains more than strong enough to keep unemployment trending down. –Jim O'Sullivan, High Frequency Economics Writing in The Huffington Post, former Obama administration economist Jared Bernstein also advised caution over the numbers:

So, as my Grandma might have asked, what's not to like?

It's this: the decline in unemployment is entirely due not to job creation, but to labor force decline (employment actually fell slightly in the household survey). This important and closely watched indicator—the labor force participation rate—also fell 0.4 tenths, reversing recent gains and returning the lfpr to its low where it stood at the end of last year, commensurate with levels we haven't seen since the late 1970s. Though part of the recent decline in the participation rate reflects our aging demographics, more than half in my judgment is due to weak demand.

The BLS noted that the large decline in the labor force—about -800,000—was likely due to fewer entrants as opposed to more leavers. And this is a volatile number, as I stress below. But neither can it be dismissed out of hand: it has been essentially stuck at historically low levels for a while now. The U.S. dollar, meanwhile, gained against other currencies after the better-than-expected jobs report.

NEXT: National Honesty Day and Asteroid Death-Porn on The Independents

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  1. Everything is up for debate.

    Everything.

  2. Recovery summer!

  3. Why would anyone believe any “information” released by an Administration that has proven its basic nature is to lie about everything?

    The BLS no longer has any credibility.

    More than 41 percent of all working age Americans do not have a job.

    http://www.zerohedge.com/news/…..unemployed

  4. Economy is getting better and libertarian agonists and bitcoin funny money advocates are left holding their well-deserved bag. Quick question: have any of the doom-and-gloom predictions made by right-wingers and libertarians in 2009 ( you know, that Obama was going to preside over 20% unemployment, that there were going to be hordes of Molotov cocktail wielding Leftists in the street, etc., etc., etc.) come to pass? I’d just like one prediction made in 2009 by any prominent libertarian that proved correct. Pretty please.

    1. I think most of us figured the economy would stagnate due to Obama’s dithering on major issues. It had to come up a bit, as it had hit a terrible low, but none of us felt we would be out of the woods until he was gone.

      Pretty much universally held by the right, and also completely true.

      Want some more predictions that came true?

      1. When I heard his “Yes, we can” speech I told my wife this guy just won the election, but he is a snake oil salesman. Re-read the speech. He was blowing smoke up our butts right from the start.

        Also true, and another prediction.

        When Bhengazi first happened and we heard it was about a video everyone I knew on the left said ‘not plausible…they’re lying’. Also, turned out to be true.

        1. Sorry…on the right…

    2. I don’t recall any “prominent” libertarians claiming over 20%, but considering The Stimulus et al was supposed to keep us in comfortable single digits, I’d say such a prediction would have decent bragging rights. U-6 unemployment was over 15% until February 2012.

    3. “Economy is getting better”

      Not according to the news it’s not:

      “US Economy Slowed to 0.1 Percent Growth Rate in Q1”

      http://abcnews.go.com/Business…..r-23518159

  5. Forget unemployment; look at this instead which looks at how many between the 25th and 55th birthdays are employed. Part time work counted as a decimal fraction of a full time job.

    MEN
    http://research.stlouisfed.org…..5MAUSM156N
    Was 95.1% in November 1955.
    Has declined ever since.
    Highest value right before GCF = 88.2%, October 2006.
    All time low = 79.5%, early 2010.
    Latest value = 82.8%

    Better than 1 in 6 prime age males are not working.

    Women
    http://research.stlouisfed.org…..5FEUSM156N
    All time high = 75.2% in April 2000.
    Latest value = 69.7%.

    Nearly 1/3 of prime age women are not working.

    1. I don’t think the figures mean the same for women as they do for men. For example, it’s very unlikely that a man who drops out of the workforce has a spouse who is earning all of the income.

      1. You must be about my age. I have seen this sort of thing quite a lot with lower-class millenial women. It’s as if the whole strata of sex, love, family, children and future have delaminated. There’s no concern about the boyfriend who got her pregnant has no job and no prospect of one. The next child is by some different idiot who also sees life as hanging out on a street corner. Try to talk to these women about picking men who will work and you’d swear you must be speaking Apalachee.

  6. Mission Accomplished!

  7. Politics, pure smoke and mirrors. In the meantime, people are being crushed under the weight of government.

  8. More jobs are being added (after many were destroyed in previous years) but the hourly wage and working hours are mostly flat.

    If good paying, stable jobs are on the increase, then there wouldn’t be any raging “fair wage” battle. People’s lives won’t be changed by downgrading to burger flipping or retail jobs, and 99% of us ain’t getting jobs in the tech industry. Companies now pretty much hire from within or receive referrals internally.

  9. The CIA later modified organization Social media has added a warning about the protests surrounding tissue “voluntary Benghazi on the U.S. Embassy in Cairo to protest attacks inspiration,” he said, and pointed the way forward. Talk about what is fresh? Film “innocent Muslims.”

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