Is Unemployment Low Right Now

Shrinking Labor Force Explains Drop In Unemployment

Last Fridays release of the Employment Situation report by the Bureau of Labor Statistics showed the economy added 120,000 jobs, dropping the unemployment rate to 8.6 percent. Despite this positive sign, last months rate of job growth was still too low to begin healing the labor market. In her analysis of the report, labor economist Heidi Shierholz explained that most of that decline can be explained by the drop in the labor force participation rate from 64.2 percent to 64.0 percent.

The U.S. is currently 6.3 million jobs below where it was when the recession started. But because the working-age population grows as the population expands, in the nearly four years since the recession started, we would have needed to add around 4.6 million jobs to keep the unemployment rate from rising, wrote Shierholz.

This means the labor market is lacking roughly 10.9 million jobs.

In this weeks Economic Snapshot, EPI President Lawrence Mishel further explained how the shrinking labor force helped paint a rosier picture of Novembers job growth than what the underlying data really show.

Since the share of the population employed last month58.5 percent is the same as when the unemployment rate peaked, the growth in employment has only kept pace with the growth of the working-age population.

Why Unemployment Claims Are At Their Lowest In Decades

• Initial claims for unemployment benefits fell last week to their lowest level since Sept. 6, 1969, according to the Labor Department.
• That statistic includes a seasonal adjustment, a standard practice meant to account for labor patterns at different times of year. The Covid pandemic has complicated that adjustment, economists said.
• Without that adjustment, claims moved in the opposite direction. They rose by about 64,000 from the prior week, a 29% increase.

Claims for unemployment benefits dropped to their lowest level in decades last week. However, that statistic is getting skewed by pandemic-era labor distortions, making it seem a bit rosier than reality, economists said.

There were 184,000 initial claims the week ended Dec. 4, the U.S. Department of Labor said Thursday. That’s 43,000 fewer than the week prior and the lowest level since Sept. 6, 1969.

The report tops another eye-popper just two weeks earlier, when claims also fell to a five-decade low.

But these data points include a seasonal adjustment, which controls for layoff patterns at various times of year.

Without that tweak, unemployment claims rose by about 64,000 last week , to a total 281,000, according to the Labor Department.

How can the seasonally adjusted and unadjusted data move in opposite directions?

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Alternative Measures Of Unemployment

In response to concerns that the official rate does not fully convey the health of the labor market, the BLS publishes five alternative measures: U-1, U-2, U-4, U-5, and U-6. Though these are often referred to as unemployment rates , U-3 is technically the only official unemployment rate. The others are measures of “labor underutilization.”

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Unemployment Rate And Covid

In response to pandemic-related closures or business cutbacks, unemployment in the United States achieved historic records. In May 2020, 49.8 million individual reported they had been unable to work at some point in the prior four weeks because their employer closed or lost business due to the pandemic. The unemployment rate increased from 4.4% in March 2020 to 14.8% in April 2020, achieving levels not seen since the 1930s.

The impacts of COVID-19 were experienced across the nation, as every state in the United States experienced a higher unemployment rate than what was recorded during the Great Recession. However, unemployment rates disproportionally impacted different sectors:

• Financial Activities: The unemployment rate in May 2020 was 5.7%, while the unemployment rate in July 2021 had improved to 3.0%.
• Leisure and Hospitality: The unemployment rate in April 2020 was 39.3%, while the unemployment rate in July 2021 had improved to 9.0%.
• Wholesale and Retail: The unemployment rate in April 2020 was 17.1%, while the unemployment rate in July 2021 had improved to 6.0%.

The Us Unemployment Rate Fell To A 50

When Trump became president in January 2017, the U.S unemployment rate was 4.7 percent. It fell gradually but stayed above 4 percent in 2017. In 2018, the U.S. unemployment rate continued to come down and fell below 4 percent.

Under Trumps presidency, U.S. unemployment fell to historical lows of 3.5 percent in September 2019. U.S. unemployment rose to 3.6 percent in the fourth quarter of 2019 but fell to 3.5 percent in January 2020. The unemployment rate stayed steady at 3.5 percent in February 2020.

Nancy Pelosi, what did you do for Americans in November?Pelosi: I orchestrated a completely biased & one-sided Sham Impeachment Hearing!Donald Trump, what did you do for Americans in November?Trump: I created 266K Jobs, 3.1% Wage Growth & 50 Year Low Umemployment Rate.

CHIZ

When the COVID-19 pandemic started, the U.S. unemployment rate rose sharply to 4.4 percent in March. The rate rose to 14.8 percent in April 2020, which was the peak during the pandemic. Since then, the U.S. unemployment rate has continued to come down and it was 6.3 percent in January 2021 when Biden became the U.S. president.

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Californias Labor Market By The Numbers

• Californias July 2022 unemployment rate of 3.9 percent is the lowest ever on record in a data series that dates back to 1976.
• The state has now regained 97.3 percent of the 2,758,900 nonfarm jobs lost during March and April of 2020 due to the COVID-19 pandemic. As of July 2022, Californias private sector has fully recovered from pandemic losses.
• Seventeen of the past 18 months showed month-over nonfarm job gains totaling 1.6 million jobs over that time period.
• Ten of Californias 11 industry sectors gained jobs in July with Professional & Business Services and Educational & Health Services both up 20,500 jobs since June 2022. The former saw above-average gains in Computer Systems Design, Advertising, and Investigation & Security Services, while the latter saw increases in Offices of Other Healthcare Practitioners, Nursing & Residential Care Facilities, and Individual & Family Services.
• Financial Activities was the only industry sector to post a month-over job loss due mainly to reductions in Insurance Carriers.

1. The unemployment rate comes from a separate federal survey of 5,100 California households.2. The nonfarm payroll job numbers come from a federal survey of 80,000 California businesses.

Trend And Cycle Of The Current Low Unemployment Rate

We next assess how much the trends in the transition rates contribute to the unemployment rate trend. We construct a trend in the unemployment rate from the transition rate trends between employment, unemployment, and OLF, using the relationship that links the transition rates to the unemployment rate. This measure of the unemployment rate trend is analogous to conventional estimates of the long-run natural rate of unemployment. Figure 3 shows the unemployment rate and its estimated long-run trend.

Figure 3Unemployment rate and estimated long-run trend

Note: Trend constructed from transition rate trends between employment, unemployment, and OLF.

First, we find that the unemployment rate trend fell substantially over the past decade. This decline accounts for the entire difference between the unemployment rate during the previous business cycle peaks of 2000 and 2007 and current unemployment. For example, the unemployment rate at the end of 2019 was 0.9 percentage point lower than in 2007, while its trend is 1.2 percentage points lower than in 2007.

Second, further analysis shows that the entire decline in the unemployment rate trend during the past decade can be attributed to the long-run declines in the transition rates into unemployment, equally split by the decline in the trends of the transition rates into unemployment from employment and from OLF.

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Is There A Labor Shortage

WHAT MATTERS: Republican governors are rejecting expanded federal unemployment benefits for their citizens because they say there is a labor shortage restaurants cant open, goes the storyline, because workers would rather collect unemployment and not work. Whats really happening?

TAPPE:Americas labor market is in a weird spot. On the one hand, some employers just cant find workers to stem rising demand for goods and services. Meanwhile, millions of people remain unemployed or out of the labor market . As of April, America was still down 8.2 million jobs compared to February 2020.

So what gives?

Millions of American workers still need the enhanced unemployment assistance, which provides an additional $300 per week. It is earmarked to end in September. Research from Bank of America recently found that the pandemic-era benefits indeed do keep people from looking for work but only if people made less than $32,000 per year before, which is less than half the national median income. For these low-income workers, it makes sense not to work but to collect benefits, while for higher-income earners it doesnt.

But income might only be one part of the puzzle. Workers still have to weigh health risks and care obligations against a return to work.

Why Is Unemployment Currently So Low

Unemployment is at a 50-year low. The low rate is not from an unusually high job-finding rate out of unemployment but, rather, an unusually low rate at which people enter unemployment. The low entry rate reflects a long-run downward trend likely due to population aging, better job matches, and other structural factors. These developments lowered the long-run unemployment rate trend. At the end of 2019, the unemployment rate was below the trend but no more so than in previous business cycle peaks, indicating that the labor market is no tighter.

The current U.S. unemployment rate is at a 50-year low. Is it so low because the rate at which people find jobs and leave unemployment is unusually high, or because the rate at which people become unemployed is unusually low? How does it compare to the previous business cycle peaks?

In this Letter, we analyze the underlying transitions between unemployment, employment, and out of the labor force and assess the trend and the cycle of the current unemployment rate. We find that current unemployment is so low not because of the high job-finding rate but because of low entry rates into unemployment, from both employment and OLF. In fact, at the end of 2019 the job-finding rate remained below its peak reached prior to the 2007-09 recession, while the rate at which people separated from jobs into unemployment was at its lowest point in four decades.

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Unemployment Numbers Bls Vs Gallup June 2017

Data Collection Methods:

For Calculating Unemployment, the BLS says they interview60,000 different households statistically calculated to represent the entire country. However, they only contact about 15,000 of these households and then use statistical modeling to estimate the U.S. unemployment rate from this data sample. The households in the pool are rotated to limit the burden on any specific family. In addition to questions about employment status, the CPS tracks work experience, annual earnings, school enrollment, and whether school-aged children are working, etc.

See Is the Government Fudging Unemployment Numbers? for the comparison of Gallup numbers vs. Bureau of Labor Statistics numbers.

What The Us Unemployment Rate Doesnt Tell You

The true measure of unemployment depends on who you ask

Just how healthy is the US jobs market? On Friday, the Bureau of Labor Statistics released its latest jobs report, showing that the US added a disappointing 194,000 jobs last month while announcing that the official unemployment rate fell to 4.8%, the lowest its been since its frightening climb to 14.7% when the Covid-19 pandemic first struck the US.

The figures seem somehow disconnected and, for some, Septembers headline figure is woefully misleading, as it is every month. What if the true unemployment rate is actually closer to 22%?

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Us Unemployment Sinks To 39% As Many More People Find Jobs

WASHINGTON The nations unemployment rate fell in December to a healthy 3.9% a pandemic low even as employers added a modest 199,000 jobs, evidence that they are struggling to fill jobs with many Americans reluctant to return to the workforce.

The drop in the jobless rate, from 4.2% in November, indicated that many more people found work last month. Indeed, despite the slight hiring gain reported by businesses, 651,000 more workers said they were employed in December compared with November.

Still, the data reported Friday by the Labor Department reflected the state of the job market in early December before the spike in COVID-19 infections began to disrupt the economy. Economists have cautioned that job growth may slow in January and possibly February because of omicron cases, which have forced millions of newly infected workers to stay home and quarantine. The economy is still about 3.6 million jobs short of its pre-pandemic level.

For now, steady hiring is being driven by strong consumer demand that has remained resilient despite chronic supply shortages. Consumer spending and business purchases of equipment are likely propelling the economy to a robust annual growth rate of roughly 7% in the final three months of 2021. Americans confidence in the economy rose slightly in December, according to the Conference Board, suggesting that spending was probably healthy for much of last month.

How A Low Unemployment Rate Can Be Bad For Companies

Higher unemployment rates can mean talent is readily available, especially if there is a high level of skilled/tertiary unemployment. If the unemployment rate is low, it means recruitment of suitable staff is more difficult. A smaller applicant pool may mean companies are unable to find a suitable candidate or employ someone without the required skill set, leading to inefficiencies. Employees can also have more bargaining power, potentially driving up salary demands and impacting a companys profitability.

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Uk Unemployment Rate Drops To Fresh Low

The Bank of England has said it will act forcefully at its November meeting, and the latest UK jobs numbers are unlikely to get in its way. Whether we get a 75bp or 100bp rate hike will depend on whether the government’s fiscal plan in late October succeeds in stabilising markets

If youre looking for a source of good news in the UK right now, the jobs market is not a bad place to look. The unemployment rate fell to another post-1970s low of 3.5%, while wage growth accelerated. And despite all the concerns about recession which indeed is our base case for this winter there are few signs of it in the jobs market just yet. Redundancies are low and stable, even if vacancy levels have begun to gradually tail off.

Its not all rosy, however, and these positive headline figures mask some concerning underlying trends. Employment is still well below pre-virus levels, and the number of people inactive ie neither working nor actively seeking a job has risen by more than half a million since Covid-19 began. While that latter figure fell slightly in these latest numbers, the number of people classified as long-term sick and out of the jobs market has continued to climb. These figures are up by almost 170,000 people in the past three months’ worth of data alone. Its hard to escape the conclusion that this is at least partly linked to delays in the NHS.

Long-term sickness continues to draw people out of the labour market

Macrobond, INGBank of England Decision Maker SurveyTags

Difference Between The Unemployment And Jobs Reports

The unemployment rate and figures from the jobs report don’t always tell the same story, because they are taken from two different surveys.

The unemployment rate is taken from the household survey of individuals. It describes who is employed and who isn’t based on their responses.

The number of jobs added is taken from the establishment report, more commonly called the “nonfarm payroll report.” This survey of businesses describes how many jobs were created or lost by industry.

The number of unemployed doesn’t match the number of jobs lost, because these reports are taken from completely different sources. Those discrepancies are expected, and the estimates are revised each month as more data comes in.

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It’s Hard To Know Why People Came Off The Sidelines

The Labor Department doesn’t pinpoint why people came off the sidelines in August. Survey data suggests finances may play a role in some workers’ decision, though.

About 59% of job seekers said they felt financial pressure to accept their first job offer in July, up from 51% the month prior, according to a recent ZipRecruiter survey. Those facing serious financial difficulties also rose substantially, to 16.6% from 12.3%.

The rising unemployment rate is a concern if it continues. But the strong labor force gains we saw underneath are a really encouraging sign.Daniel Zhaolead economist at Glassdoor

There’s a positive and negative aspect to the dynamic, Pollak said. On one hand, people may feel they need job income as their savings dwindle and inflation stresses household budgets, she said on the other, it means workers see an opening in the labor market.

“When your chance at winning the lottery goes up, you’re more likely to play the game,” Pollak said. “People do jump in and give it a try when it’s easier to succeed.”

Us Employers Added 528000 Jobs And Unemployment Falls To 35 Percent

WASHINGTON Americas hiring boom continued last month as employers added a surprising 528,000 jobs despite raging inflation and rising anxiety about a recession.

The U.S. economy shrank in the first two quarters of 2022 an informal definition of recession. But most economists believe the strong jobs market has kept the economy from slipping into a downturn.

The American job market has repeatedly defied skeptics this year. Economists had expected only 250,000 new jobs this month.

There are, of course, political implications in the numbers being released Friday: Rising prices and the risk of recession are likely to weigh on voters in Novembers midterm elections as President Joe Bidens Democrats seek to maintain control of Congress.

The economic backdrop is troubling: Gross domestic product the broadest measure of economic output fell in both the first and second quarters consecutive GDP drops is one definition of a recession. And inflation is roaring at a 40-year high.

The resiliency of the current labor market, especially the low jobless rate is the biggest reason most economists dont believe a downturn has started yet, though they increasingly fear that one is on the way. History isnt entirely reassuring: The unemployment rate was even lower 3.5% when an 11-month recession began in December 1969.

Recession is not an American problem alone.

If Europeans cant store enough gas for the cold months, rationing may be required by industry.

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