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Sunday, March 09, 2014

What would make me a whole lot happier about the monthly jobs report

The (employer-based) employment change was +175,000 for February 2014, compared with January 2014.  More importantly, the 12-month period (February 2013 to February 2014) shows a gain of 2.16 million jobs.  Employment has been growing, on a 12-month basis, at about 1.5% to 1.8%, since September 2011.  This is a good, but not great, rate of employment growth.  It's "not great" especially coming out of a recession.  Coming out of the recession of the early 1980s, 12-month employment growth rates were above 2.5% beginning in September 1983 through November 1985.  And, from late 1983 to late 1984, annual growth rates in employment were above 4%.  Coming out of the "Great Recession," there are only two 12-month periods with an employment growth rate above 2%, and nothing above 2.17%.  (Even the tepid recovery from the 2001 recession saw six months with annual growth rates above 2%. And the average 12-month growth rate in employment since 1948 has been 1.72%.)

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So it's hard to work up much enthusiasm about the recovery based on growth in establishment employment.  However, the unemployment rate has dropped quite significantly, and in February was 6.7% (up slightly from 6.5% in January).  But what I'd really like to see, in addition to somewhat more robust employment growth, is some positive news about labor force participation.

(Click to enlarge.)

Despite a fractional increase in labor force participation in  January and February (up to 63.0%, from 62.8% in December), labor force participation has consistently declined during the recovery.  In fact, the 12-month percentage change in labor force participation has been negative since August 2008.  That's before the beginning of the recovery (June 200), according to the NBER Business Cycle Datng Committee.  That is, in more than four and a half years of recovery, the labor force participation has not once grown on a year-over-year basis.  This is, since monthly data on labor force participation have been available (1948), the first recovery ever during which labor force participation has not increased.

So what would make me a whole lot happier?  Not just growth in the labor force, but an increase in the labor force participation rate, which is, as of February, three percentage points below its level at the beginning of the recession.

(All data from the Bureau of Labor Statistics.)


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