Is the U.S. Workforce Nearing Full Recovery?

We've updated our monthly workforce analysis to include last week's Employment Report for February. The unemployment rate ticked down from 4.8% to 4.7%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) surprised forecasts at 235K.

The Unemployment Rate

The closely watched headline unemployment rate is a calculation of the percentage of the Civilian Labor Force, age 16 and older, that is currently unemployed. Let's put this metric into its historical context. The first chart below illustrates this monthly data point since 1990.

In the latest report, this indicator dipped to 4.7%. The age 16+ population increased by 164 thousand, and the labor force (the employed and unemployed actively seeking employment) rose by 340 thousand. The number of employed jumped by 447 thousand while the ranks of the unemployed fell by 107 thousand. In other words, the growth in the labor force was mostly attributable to unemployment contraction and a jump in the number employed.

Unemployment Rate since 1990

Unemployment in the Prime Age Group

Let's look at the same statistic for the core workforce, ages 25-54. This cohort leaves out the employment volatility of the high-school and college years, the lower employment of the retirement years and also the age 55-64 decade when many in the workforce begin transitioning to retirement ... for example, two income households that downsize into one-income households.

In the latest report, this indicator remained at 4.1% (to one decimal place) from the previous month. The cohort population increased by 20 thousand and the labor force jumped by 167 thousand. The breakdown of the growth is an increase of 181 thousand employed and a 14 thousand decrease in the unemployed. Most of the labor force growth was due to the increase in the number employed.

Unemployment Rate Ages 25-54