Another Good Jobs Report
The BLS released the Employment Situation Report for February 2011 today and it was another good report (that makes a string of 3 in a row. Both December’s and January’s initial reports were revised up (by about 30,000 jobs each), and the unemployment rate (U-3) dipped slightly to 8.9% (with U-6 at 15.9%). The Establishment Survey (the survey of businesses) showed a gain of +192,000 jobs (with private sector producing +222,000 jobs) and the Household Survey (obviously the survey of 60,000 households) showed a gain of 250,000 jobs for the month. Both the employment-population ratio and the labor force participation rate were unchanged in February. Overall, this was a pretty good jobs report and the drop in the unemployment rate is now starting to mirror the quick drop that followed the end of the 1981 recession (we shall see how long this continues, but with initial unemployment insurance claims dropping precipitously, it may continue for a while unless oil continues to go nuts).
While many have been challenging the labor force numbers, it is worth noting that those “not in the labor force” ticked up slightly (the overall labor force grew by about 60,000) and those “not in the labor force, but want a job” stayed the same. Along those lines I must note that since mid 2008 (when the data set began), those 65+ saw their numbers “not in the labor force” (ie those that have left the labor force) increase by roughly 2 million people, which makes up for a lot of the stagnation in labor force growth and falls right in to what we would expect as the boomer population continues to age (another reason why I am not that concerned about the low labor force participation rate, as it is getting back towards where it was prior to the peak boomer working years).
To take a further look at the participation rate, I have included a graph showing the data going back to 1972 (when a huge gain in the women part rate began):
As you can see, there was a huge spike essentially between the end of the 74 recession and the beginning of the 80 recession (which correlated with both the first boomers entering the labor force and an upward move in the part rate of women by about 5%), then a stagnation during the double dip recessions of the early 80s, which is followed by another huge rise in the participation rate as women continued to join the labor force (about another 8% move up) and the boomer generation peaked in terms of participation. Following those major moves, the participation rate stays fairly stagnant throughout the 90s and then begins to move down again as the first boomers reach 62 (important because that is when you can claim reduced social security benefits) and really craters during this recession (which is likely a combination of the normal stagnation we would expect during a recession coupled with boomers exiting the labor force). I would expect that the move down in the labor force will likely end up with a rate in the 63% area once the boomer move out is finished, but would not expect a big move back up like many suggest just because we are starting to see job growth again.