Jobs

February Jobs Report

Policy • March 12, 2014

Last week, the Bureau of Labor Statistics (BLS) released its February monthly jobs report.  While nonfarm payroll employment increased by 175,000, the unemployment rate increased slightly to 6.7 percent.[1]  Moreover, the Labor Force Participation Rate remained at 63.0 percent for the second consecutive month, among its lowest levels since the Carter Administration.[2]  Though the economy created more jobs than expected in the month of February, the number of long-term unemployed Americans (those unemployed for 27 weeks or longer) increased by 203,000, a sign that the President’s economic recovery strategy is failing to create the environment necessary to promote economic growth and get Americans back to work.[3]   Four years after the end of the recession, millions of Americans are still unemployed and millions have simply stopped looking for work.  While job growth in February is positive, the overall trend of slow growth demonstrates the weakness of this recovery.

Facts You Need to Know:

  • The unemployment rate increased in February from 6.6 percent to 6.7 percent,[4] with the number of unemployed persons increasing by 223,000.[5]   While the number of jobs created in February outpaced estimates, job creation is still insufficient to keep up with growth in population.  Moreover, the U-6 unemployment rate—a comprehensive measure of labor underutilization that takes into account persons marginally attached to the labor force as well as persons who would like to be employed full time but can only find part-time work—is 12.6 percent, slightly down from January, and 4 percent higher than in the fourth quarter of 2007 (when it stood at 8.5 percent, the height of labor force participation).[6]   In February, CBO estimated that “employment at the end of last year was about 6 million less than it would be if the unemployment rate was back down to its prerecession level and the participation rate was back up to the level it would be without the current cyclical weakness.”[7]                                 
  • Long-term unemployment (those unemployed for more than 27 weeks) increased by 203,000 to 3.85 million in the month of February, almost 37 percent of the total unemployed population.[8]   In addition, an independent study from the University of New Hampshire found that the percentage of Americans who have been seeking employment for more than six months has doubled from 18.4 percent to 39.4 percent since 2007.[9]  An increase in the proportion of long-term unemployed is especially problematic, as it signals that a permanently unemployed class may be developing in the United States.
  • The Labor Force Participation Rate (LFPR), which identifies the number of people who are active participants in the labor force (those who are employed and those who are unemployed but actively seeking work, relative to the total population), remained flat at 63.0 percent in February.[10]  The LFPR remains among its lowest levels since the late-1970s.
  • The Employment-Population Ratio, a metric that establishes the raw employment rate, remained at 58.8 percent in February.[11]  The employment population ratio remains 1.8 percent lower than it was when President Obama took office.[12]

Why Does a “Pro-Growth” Agenda Matter?

  • The clearest consequence of a stagnant economic recovery is the significant jobs gap.  According to a report from the Joint Economic Committee, if the current recovery kept pace with the average of other past recoveries, there would be 4.3 million more private jobs than currently exist in the job market (see chart below).  According to JEC estimates, the current recovery has produced $1.3 trillion less in real GDP and $3,850 less in real disposable income per capita than an average post-1960 recovery.[13]
  • The LFPR remains among its lowest rates since 1978.  Labor force participation has yet to grow to pre-Obama Administration levels in the last five years, when the LFPR stood at 65.8 percent.[14]  Even more concerning is the fact that many working age Americans are sitting out of the workforce.  Yet, the percentage of Americans over age 60 in the workforce has actually increased since December, 2007.  Thus, the decline in the labor force is not simply due to changing demographics; it is a direct consequence of the economic recovery’s weakness.

[6] According to the BLS, “Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not currently looking for work. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.” See: http://www.bls.gov/news.release/empsit.t15.htm

[7] The Budget and Economic Outlook: 2014 to 2024, Congressional Budget Office (Feb. 2014), p. 37.

[9] “The Long Term Unemployed in the Wake of the Great Recession,” Carsey Institute, University of New Hampshire, Winter 2014, p.4.

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