First Friday of every month, the Bureau of Labor Statistics releases data on the previous month’s state of the labor market. The ‘headline number’ is 209,000 net new jobs. This year the numbers of net new jobs have looked good — over 200,000 a month. It could certainly be worse, but we should realize the growth we are getting is along a trend line that is still well under full employment. The unemployment rate is now 6.2 percent, but this actually understates the extent of labor market ‘slack’ (under-utilization of human resources). The reason is that many have dropped out of the labor force and are therefore not included in the unemployment rate. Even so, we know from experience the rate could be much lower, in the low four percents, as it was before 2001.
The more relevant metrics to watch are the employment-population ratio and the labor force participation rate, which are hardly better than they were at the low point in this economic downturn (2009). As Dean reported last month, after a much bigger jobs number came out (298,000), at current rates it still takes three years to get back to full employment.
P.S. Here’s Dean.
P.P.S. Here’s Jason Furman, for the White House. His analyses are always very substantive, though his characterization of the labor force participation rate as ‘stable’ is worth a raised eyebrow.