Clanging in the New Year

by: Zach Bethune, Thomas Cooley, Peter Rupert

Following an unexpectedly weak report in December (now revised up only slightly from 74,000 to 75,000) the monthly employment report from the BLS today reveals another tepid increase of only 113,000 jobs in January.  The unemployment rate declined slightly from 6.7% to 6.6%, inching towards the Federal Reserve’s stated target of 6.5% in which they will consider changes in the federal funds rate. Since January 2013, the unemployment rate has declined 1.3 percentage points.  In all, the headline story of the US labor market remains much the same as it has been since the beginning of the recovery in mid-2009:

1.  slow, but positive job growth,

empchgm-2014-02-07emp-2014-02-07

 2. a steadily declining unemployment rate.

urate-2014-02-07

You might think that even though the ‘recovery’ has taken longer than usual, the labor market seems to be finally reaching a healthy state. That story is consistent with the figures above. Both employment and unemployment are reaching pre-recession levels. However, there are many features of a healthy labor market that these two headline statistics cannot capture. For instance if the rate of job growth cannot keep up with population change or if  an unemployed worker becomes discouraged and leaves the labor market. Here are a few additional headlines of the current recovery:

3. A declining  labor force participation rate, currently at its 1980 level.lfp-level-2014-02-07

4. A persistently low (and unchanging) percentage of the population employed. 

epr-2014-02-07

5. A consistently less efficient labor market

beveridge-2014-02-07

6. Historically high unemployment duration

uduration-2014-02-07

Private employment was up 142,000 while the government sector shed another 29,000 jobs. Very little else stands out: average weekly hours remained the same at 34.4; average hourly earnings inched up to $24.21.

From the household survey the participation rate inched up to 63.0% from 62.8%, as did the employment to population ratio, 58.8 from 58.6.

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