Is the U.S. Workforce Nearing Full Recovery?
We've updated our monthly workforce analysis to include last week's Employment Report for March. The unemployment rate ticked down from 4.7% to 4.5%, and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) disappointed forecasts at 98K.
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 4.5%. The age 16+ population increased by 168 thousand, and the labor force (the employed and unemployed actively seeking employment) rose by 145 thousand. The number of employed jumped by 472 thousand while the ranks of the unemployed fell by 326 thousand. In other words, the growth in the labor force was mostly attributable to unemployment contraction and a jump in the number employed.
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 dropped to 3.9% (to one decimal place) from the previous month. The cohort population increased by 5 thousand and the labor force jumped by 47 thousand. The breakdown of the growth is an increase of 28 thousand employed and a 186 thousand increase in the unemployed. Most of the subdued labor force growth was due to the small increases in the number employed and population.