Another strong jobs report
May 6, 2022
Once again, the Bureau of Labor Statistics Employment Situation Report showed impressive gains in April, even if they were not as large as in the first months of 2022. Payroll employment rose by 428,000 in April, led by the 78,000 jobs added in the leisure and hospitality sector, which is likely gearing up for the summer. The manufacturing sector, as well as the transportation and warehousing sector, also posted solid gains, coming in at 55,000 and 52,000 respectively. Overall, job growth is still proceeding at a strong pace.
- Another strong jobs report with 428,000 new jobs created in April 2022.
- Black and Hispanic or Latino/a/e employment remains above pre-pandemic levels.
- As unemployment continues to fall and the unemployment rate remains at historically low levels, it is increasingly helpful to look to other categories of un- and underemployment for a broader assessment of the employment situation.
At 3.6%, April’s unemployment rate was unchanged from the previous month. However, the broader U-6 unemployment measure did increase slightly, up to 7.0%, driven by a small rise in the number of workers marginally attached to the labor force, which now stands at 1.6 million. The total number of people out of the labor force who want a job now also rose to 5.6 million in April, the highest count since October 2021.
As unemployment continues to fall and the unemployment rate remains at historically low levels, it is increasingly helpful to look to other categories of un- and underemployment for a broader assessment of the employment situation. Two of the most prominent groups in this regard are those who want a job now but are not in the labor force and those who have jobs but are involuntarily working part-time schedules.
The first category represents additional unemployment. Most of those in this group are not officially classified as unemployed because they have not actively sought work in the past month. Involuntary part-time workers are underemployed, in the sense that they could and would like to work more hours but are unable to find an employment opportunity which would allow them to do so.
Just like in previous expansions, the difference between the number of unemployed workers and the combined total of those not-in-the-labor-force who want a job now and involuntary part-time workers has been increasing. This latter group constitutes additional un- and underemployment which is not captured by the U-3 measure alone. During downturns, sharp rises in unemployment push these two counts close to one another. In 2009 and 2010, as Figure 1 below shows, the size of the officially unemployed population was about the same size as the combined number of involuntary part-time workers and those who wanted a job but had not actively searched for one in the past four weeks, resulting in their exclusion from the unemployment figures. While the charge that the U-3 unemployment rate undercounts un- and underemployment is most commonly heard in times of recession, this consideration is just as important in times of expansion and tighter labor markets. Perhaps even more so. To illustrate this point, Figure 2 below compares the number of involuntary part-time workers and those not in the labor force who want a job to the number of unemployed workers. In other words, it charts the relation:
In March and April 2022, this ratio reached 1.66, the highest value since at least the mid-1990s. For every unemployed worker today, an additional 1.66 workers are either involuntarily working part-time schedules or are not in the labor force but want a job. As Figure 2 shows, this ratio increases in expansions as the number of unemployed workers falls. This is not too surprising. As a narrow measure of unemployment, the unemployment rate tends both to increase and decrease faster than the broader counts. indicating that the unemployment count alone increasingly diverges from the number of un- and underemployed workers. Monitoring this ratio, especially as the unemployment measure alone increasingly diverges from broader counts of un- and underemployed workers, helps to show the changing dynamics of additional un- and underemployment over the business cycle, especially during its ‘tightest’ stages.
The strong jobs recovery continues: yet there remain 16 million un- and underemployed workers
April 1, 2022
The strong U.S. jobs recovery continued through March 2022. Payroll employment grew by over 430,000. Job gains in January and February 2022 were revised upwards as well. Though slight, the increase in the labor force participation rate from 62.3 to 62.4 is a welcome sign. March’s labor force participation rate is still a full percentage point below February 2020, but has now risen in each of the past three months.
- Unemployment rates fell across all social group categories (race/ethnicity/gender) used by the BLS.
- The number of those not-in-the-labor-force who want a job now increased more than the overall fall in the number of unemployed workers.
- Payroll employment grew by over 430,000, and there were upward revisions of previous months.
- The more comprehensive U-6 returns to pre-pandemic levels.
- Roughly 16 million workers are either unemployed, working involuntarily part-time, or not-in-the-labor-force but wanting a job.
The unemployment rate fell to 3.6% in March, marking the lowest unemployment rate since February 2020. At 6.9% the U-6 unemployment rate, which many consider a more comprehensive measure of un- and underemployment, returned to pre-pandemic values as well. Unemployment rates fell across every racial/ethnic group in the BLS report, though persistent differentials between groups remain. The unemployment rate for Black men and women fell to 5.6% and 5.5% respectively. Despite an overall decline to 4.2%, the unemployment rate for Hispanic or Latino men ticked upward to 3.8% while that for Hispanic or Latino women dropped from 4.8% to 4.2%.
While employment gains and lower unemployment are both welcome news, the number of those not-in-the-labor-force who want a job now increased more than the overall fall in unemployment. Although they want to work, the former group is not counted as officially unemployed because they have not actively sought work in the past four weeks. Despite the increase in labor force participation, the number of workers not-in-the-labor-force who want a job grew by 382,000 while the pool of unemployed workers declined by 318,000. Over 5.7 million of those not-in-the-labor-force now report wanting a job.
For the second month in a row now, involuntary part-time employment increased. Together, roughly 16 million workers are either unemployed, working involuntarily part-time, or not-in-the-labor-force but wanting a job. For several months now, this count has flat lined, hovering stubbornly around a level of 16 million.In last month’s EDI note, we compared the number of newly employed workers entering from unemployment to those coming from not-in-the-labor-force. Updating that chart with data from today’s BLS release shows that for the past months, nearly 2.5 times as many workers enter employment directly from not-in-the-labor-force than from unemployment. This ratio remains well below its pre-pandemic values.A few months hardly constitutes a longer-term trend. Yet the steadiness in this ratio, along with the steady count of 16 million un- and underemployed workers since the end of 2021 suggest that there is still room for job growth, as today’s job numbers show. There is no reason to suppose that these levels of un- and underemployment constitute a new post-pandemic ‘natural’ level, even if they have not budged much lately.
Employment Guarantee in Action: Insights from India
April 1, 2022
Ranchi University, India
India’s National Rural Employment Guarantee Act 2005 (NREGA) is an experiment of major significance. It has demonstrated the soundness, feasibility and sustainability of employment guarantee over an extended period.
NREGA provides a legal guarantee of employment on demand to all adults in rural areas, subject to a maximum of 100 days of work per household per year. Employment is provided on local public works identified through participatory planning at the village level.
Aside from employment on demand, NREGA workers have other entitlements such as (1) unemployment allowance (if employment is not provided within 15 days), (2) payment of wages within 15 days, (3) basic worksite facilities, (4) compensation in the event of accident. Initially, workers were also entitled to the statutory minimum wage applicable to agricultural labourers in the area. Later on, however, the Indian government reserved the right to prescribe NREGA wages, state-wise. These have stagnated in real terms ever since.
How does NREGA work? Each gram panchayat (village council) prepares an annual “shelf of projects” within the list of permissible works. Works are sanctioned by the local administration (mainly at the Block or District levels) as and when there is a demand for work. Aside from gram panchayats, implementing agencies also include government departments. Permissible NREGA works are mainly concerned with water conservation (ponds, wells, checkdams, trenches, etc.), land improvement, approach roads, environmental protection, horticulture and related activities. Some works, such as digging wells and land levelling, may be carried out on private land. At least 60% of NREGA funds are to be spent on wages. NREGA is a major source of fallback employment in rural India. During the last five years (ending 2021-22), NREGA generated 3 billion person-days of work per year on average: 50 days per household (on average) for 60 million households. In individual terms, NREGA employed 90 million workers per year on average in the same period, with a peak of 110 million in 2020-21, the first year of the Covid-19 crisis. These are official figures, probably overestimating actual employment because “muster rolls” (worksite attendance records) tend to be inflated. Still.
A special feature of NREGA is the high share of women in total employment: more than 50%, year after year. This is particularly significant considering that Indian women have very restricted access to paid employment in the economy as a whole. Further, nearly 40% of NREGA employment goes to households from a “scheduled caste” (SC) or “scheduled tribe” (ST) – marginalised groups with a share of 25% in the population as a whole. Thus, NREGA makes an important contribution to social equity, whether in terms of gender, caste, or class. What does this cost? NREGA expenditure peaked at a little over 1 trillion (1 lakh crore) Indian rupees in 2020-21, or US$ 13 billion at the current exchange rate. That’s about 0.5% of India’s GDP – a modest price to pay for such a far-reaching initiative.
So far, so good. It goes without saying that this monumental employment programme has its share of hurdles, mistakes and failures. The main problem with NREGA is that it is a pro-worker law implemented by an anti-worker system – a system steeped in indifference if not hostility towards working people. Three manifestations of this problem have caused much damage: delays in wage payments, the stagnation of real wages, and resilient corruption.
NREGA workers have a legal right to payment within 15 days, but in practice, wages are routinely delayed for weeks or months. Reasons for this include administrative foot-dragging, unreliable payment technologies, and under-funding of NREGA. To make things worse, NREGA wages have stagnated in real terms for more than 10 years, even as market wages increased. Low wages and payment delays have a destructive effect on the entire programme, because they sap workers’ interest in it. The good health of NREGA rests on the active participation of workers at every stage – project selection, work applications, asset creation, social audits, and more.
Corruption has been – and remains – a major challenge for NREGA. The programme has set a shining example of transparency, with all records pro-actively displayed on a public data portal. It also pioneered a range of anti-corruption measures including “social audits”. Yet, corrupt middlemen are constantly trying to milk the programme, often with the connivance of political leaders. In recent years, over-reliance on digital technology has also undermined some of the earlier, more participatory safeguards against corruption. In 2011-12, about 90% of NREGA wage expenditure was reflected in household data from the independent Indian Human Development Survey, but leakages are likely to be larger today.
Despite its flaws and uneven record, NREGA is a lifeline for millions of poor households in rural India. It has also made major contributions to asset creation, environmental protection, women’s empowerment, and local democracy. NREGA has not worked so well as a springboard for workers’ organisations in rural areas. However, some organisational efforts did happen and there are likely to be more in the future.
NREGA is still a learning experience, especially in India’s poorer and poorly-governed states. But it has already achieved a lot. This demonstration of the possibility of employment guarantee is an important example for the whole world.
Jean Drèze is Visiting Professor in the Department of Economics at Ranchi University, India.
Another blockbuster jobs report and still room for more hiring
March 4, 2022
The strong momentum in job growth detailed in last month’s Employment Situation continued through February 2022, with an additional 678,000 jobs added to non-farm payrolls. Today’s Employment Situation release also revised job growth estimates for both December 2021 (up by 78,000) and January 2022 (up by 14,000), bringing average monthly payroll gains to over 582,000 in the past three months. The leisure and hospitality and professional and business services sectors led the job growth charge.
- Another month of strong jobs growth.
- There is still slack remaining in the labor market, and gains are not shared widely.
- The rise in involuntary part-time work, drop in employment among Black women, and possible slowdown in the share of newly-employed workers entering from outside of the labor force, all point to a labor market which is yet to fully recover.
We at EDI are watching several trends in the labor market in order to discern how widely these employment gains are shared across the U.S. population. Men made out particularly well in February, with higher employment levels across different social groups. For example, after being stuck in the 61 percent range from October to December 2021, the employment-population ratio for Black men climbed to 64.5 in February.
February’s data on employment among women was more ambiguous. Employment levels and participation rates for women both declined slightly. The unemployment rate for women was unchanged at 3.9 percent. However, employment and participation rates for white and Hispanic or Latine women are up, meaning that falling employment and participation rates for Black women made a large contribution to the overall decline among women workers. The unemployment rate of Black women ticked up again in February. As Figure 1 below shows, it has now increased every month since November 2021. The pandemic’s disproportionate labor market impact on women has a distinct racial component, demonstrating the need for intersectional analysis of labor market outcomes.
Figure 1: Falling employment and participation rates for Black women make a large contribution to the overall decline among women workers
EDI has been monitoring part-time employment closely over the course of the pandemic. While the total number of part-time workers fell in February, the number of involuntary part-time workers rose to over four million, marking the first increase in the level of involuntary part-time employment since May 2021.
As a result, the U-6 unemployment rate, a broader measure of un- and under-employment edged up slightly from 7.1 in January to 7.2 in February. Although this is a negligible increase, it is the first one since April 2020 near the start of the pandemic. Hopefully the uptick in the U-6 unemployment rate is just a blip and not a sign of a more serious issue. We will be watching the shifts to less accommodative fiscal and monetary policy on the U-6 readings in the coming months.
Labor force flows
A well-known feature of the U.S. labor market is that fewer workers enter employment from a previous state of official unemployment than enter directly from out of the labor force. But the composition of newly employed workers coming from these two categories varies over the business cycle. In recessions, as unemployment increases, the share of formerly unemployed workers amongst those entering employment rises. During brisk expansions, as the number of unemployed workers falls the opposite happens. Newly-employed workers increasingly come from out of the labor force instead of the ranks of the unemployed. The behavior of the ratio between these two flows is therefore a helpful metric for considering which types of workers are securing new employment, since the characteristics of the officially unemployed differs from those who are not in the labor force.
As Figure 2 below shows, this pattern is playing out over the pandemic. Figure 2 plots the number of workers transitioning from not in the labor force into employment divided by the number entering employment from unemployment. On the eve of the pandemic, over three workers entered employment directly from out of the labor force for every one worker entering employment from unemployment. Data from the most recent Employment Situation Reports shows this ratio appearing to settle around 2.4 over the past few months. Though one month is not enough to draw major conclusions from these monthly data, the noticeable drop from January to February 2022 is consistent with the rise in involuntary part-time work, despite positive job growth overall.
While the increase in job growth and participation signal progress, the rise in involuntary part-time work, drop in employment among Black women, and possible slowdown in the share of newly-employed workers entering from not in the labor force all point to a labor market which is yet to fully recover.
Figure 2: At the onset of the Coronavirus Pandemic three workers entered employment from not-in-the-labor-force for every one worker entering employment from unemployment
Expectations-busting jobs growth: does the BLS Employment Situation tell the whole story?
February 4, 2022
The January Employment Situation Report showed a 467,000 job increase in nonfarm payroll employment in January 2022. This expectations-busting release also reported slight increases in both the unemployment rate and number of unemployed workers in the U.S. Yet most of the attention generated by the release focused neither on the strong January gains nor on the growing unemployment. Instead, employment growth revisions over 2021 took center stage.
- An expectations-busting 467,000 job increase in nonfarm payroll employment.
- Slight increases in both the unemployment rate and number of unemployed workers.
- Substantial revisions to estimates from the latter half of 2021.
- U.S. Census Bureau data suggest that the number of people unable to work because of the pandemic nearly doubled in January — up from 3.1 million in December 2021 to 6 million
Stronger-than-expected job creation in January, the large upward revisions to the November and December 2021 jobs data, and the latest Consumer Price Index statistics release showing a 7.5% year-over-year increase in January 2022, make a rate hike from the Federal Reserve in March all the more likely. In January 2020, worries of inflation were easily dismissed. The Federal Reserve was in the midst of lowering rates, reversing a gradual series of increases undertaken over 2016-2019. Today, just two years later, monetary policy tightening looms. Inflation is the most obvious difference between the two periods, though many economists (including us) do not see rising employment levels themselves as a primary driver of inflationary pressures. Yet compared to January 2020, the picture of today’s labor market painted by BLS statistics is not as rosy.
Practically all of the January 2022 unemployment statistics are still higher than those for January 2020. The Black unemployment rate remains double that of whites. Participation rates are lower across the board. So too for most employment-to-population ratios. Yet a few differences stand out. The number of workers in full-time employment, those working more than thirty-four hours per week, was higher in January 2022 than in January 2020. And the job openings rate is up as well. Though it seems an eternity ago, January 2020 should not necessarily be taken as a ‘back-to-normal’ benchmark. While these comparisons are helpful for thinking about the steady recovery in labor markets since the onset of the pandemic, there is little reason to suppose that full employment had been secured in January 2020.
Omicron and unemployment
The 467,000 job growth in January took many by surprise. As the Omicron variant swept through the U.S., many expected to see its toll on the January job numbers. At first glance, these concerns appear unwarranted. January’s job growth was even led by the Leisure and Hospitality sector (up by 151,000 jobs), one of the sectors most expected to be hammered by the latest wave of COVID-19.
But the direct impact of the pandemic did show up in the latest data from the latest U.S. Census Bureau’s Household Pulse Survey, which is included in the BLS Employment Situation Report. Household Pulse Survey data indicates that the number of people unable to work because of the pandemic nearly doubled in January — up from 3.1 million in December 2021 to 6 million. As the chart below shows, the number of people who did not search for work due to the pandemic, and thus were classified as not in the labor force at all, increased as well. This effect of Omicron on job search likely dampened what otherwise would have been a larger increase in the unemployment rate and/or job gains.
Figure 2: Household Pulse Survey on persons unable to work or not in the labor force due to the Coronavirus Pandemic
As the chorus of voices declaring that full employment has been reached grows, and as the latest inflation data comes in, the pressure on the Fed to tighten will likely increase on nearly all fronts. Yet our review of the January data suggests that there are still millions wanting to work who are unable to secure jobs — for a host of reasons. If the traditional policy mix cannot provide employment for these workers without generating inflationary pressures, other options should be considered. Reliance on indirect job creation policy, such as infrastructure projects and general pump-priming (whatever their other merits, not an either/or), should not and cannot be relied upon to reach full employment or close existing racial and gender gaps in employment. Targeted policy specifically designed to tackle these inequalities are needed.
The Unemployment Rate Falls, But What Is Happening With Part-time Work?
January 7, 2022
The first release of the new year brought welcome news, and a first since the onset of the COVID-19 pandemic: an unemployment rate below four percent. At 3.9 percent, December 2021’s unemployment rate is in now in a range comparable to that in the beginning of 2019. Yet expectations for a job growth bonanza in the final month of 2021 were largely disappointed. Net payroll employment increased by 199,000, less than many analysts expected.
Full-time and part-time employment
One of the patterns distinguishing the current recovery from that following the 2007-09 crisis is the behavior of full-time and part-time employment. The BLS defines full-time workers as those who work more than thirty-five hours per week, regardless of how many jobs the hours are divided across (for example, someone working twenty hours per week at each of their two jobs is considered a full-time worker). Part-time workers are those working 34 hours or fewer per week.
As Figure 1 below shows, the number of full-time workers is almost back to pre-pandemic levels. The latest release puts the full-time employment level for December 2021 at 130.2 million. Nearly two years ago, in January 2020, 130.85 million were working full-time.
Figure 1: Full-time and Part-time Employment Levels, 2007-2021
Thousands of persons
While full-time employment continues to climb, part-time employment looks quite different. At 25.7 million workers, part-time employment in December 2021 is well below pre-pandemic levels. In fact, the count of part-time workers today is lower than at any time in the entire decade preceding the pandemic. Excluding the current recovery, part-time employment has not been this low since the second half of 2009.
Part-time employment is typically divided into an ‘involuntary’ component — those who would like to work full-time schedules but cannot find employment due to ‘economic reasons’ such as a lack of opportunity — and those considered voluntarily part-time. The rapid increase in part-time employment during in the latter half of 2008 and over 2009 was largely attributable to a steep increase in involuntary part-time employment. During the recession, in addition to laying off millions of workers, firms also cut hours for millions more. However, by 2019, the involuntarily part-time made up only about 15% of part-time workers which, as Figure 2 shows, is almost identical to the situation today. With a similar share of involuntary part-time workers today as before the pandemic, it seems that today’s lower part-time employment is likely due to factors relating to voluntary part-time employment.
Figure 2: Share of Involuntary Part-time Workers Amongst All Part-time Workers
Part-time for Economic Reasons / Employed Usually work Part-time
Source: U.S. BLS, retrieved from FRED, Federal Reserve Bank of St. Louis
Voluntary part-time workers are almost twice as likely to be women rather than men (Dunn 2018: 4). Women without high school diplomas in particular make a disproportionate share of voluntary part-time workers (Dunn 2018: 12). In the current recovery, almost one million workers without high school diplomas, both men and women, are still ‘missing’ relative to their employment levels before the pandemic, as Figure 3 below shows. Here it should also be mentioned that anyone working part-time hours because they need to care for a household member is counted as voluntarily part-time, so long as this care occurs outside of a formal employment arrangement. The reason for this designation is that the BLS does not consider unremunerated care to be an ‘economic’ activity.
Figure 3: Employment Level for Workers Without a High School Diploma, 25 Years & Over
Thousands of persons
Source: U.S. BLS, retrieved from FRED, Federal Reserve Bank of St. Louis
The diverging patterns of full-time and part-time employment in the current recovery, and the well-known demographic differences between full-time and part-time workers, is additional evidence once more that a slowly rising tide is not lifting all boats (Wray & Pigeon 2000). Indeed, while the overall unemployment rate dropped below four percent, the Black unemployment rate rose to 7.1%. While the increase in payroll employment is a welcome sign, the continued stagnation in part-time employment should give pause to over-celebratory sentiments regarding the state of employment in the U.S. heading into 2022.
- Dunn, M. 2018. "Who chooses part-time work and why?," Monthly Labor Review, U.S. Bureau of Labor Statistics, March 2018, https://doi.org/10.21916/mlr.2018.8.
- Wray, L.R., & Pigeon, M. 2000. "Can a Rising Tide Raise All Boats? Evidence from the Clinton-Era Expansion," Journal of Economic Issues, Vol. 34 (4): 811-845.
Public Employment Continues to Fall
December 3, 2021
The continued growth and improvement in employment was a welcome and important headline of this month’s Employment Situation report. Yet, the increase of 210,000 in payroll employment announced today disappointed many forecasters who expected at least twice this figure. Overall, the picture and trends seem largely unchanged from the past few months. The unemployment rate fell from 4.6% in September to 4.2% in October 2021. To the relief of many, the labor force participation rate ticked upwards for the first time since the summer, from 61.6% to 61.8%. However, the labor force participation rate remains below its pre-pandemic values. In addition, the Black or African American participation rate declined from 61.1% in October to 60.8%, and the Black youth unemployment rate (age 16-19) increased from 16.1% to 21.9%, while all other racial analytical categories decreased.
- Public employment continues to decline, driven primarily by falls in local
- Payroll employment fails to meet forecaster expectations
- Labor force participation rate ticked slightly upwards for the first time since the summer of 2021, while the Black participation rate declined.
- The Black youth unemployment rate increased from 16.1% to 21.9%.
Seasonally-adjusted public employment levels fell consistently this autumn at the federal, state, and local levels. The only sub-sector of Government employment included in the BLS report which has grown is the postal service. As Figure 1 below shows, education-related employment counts for much — though far from all — of the decline at the local level.
Figure 1: A recession in local government employment
2009 - Nov 2021, seasonally adjusted
Figure 2 shows a similar pattern at the state level. The drop in public employment is likely driven in large part by budget cuts enacted at these levels of government which have exacerbated the frustrations of under-resourced, underpaid, and over-burdened teachers and other educators.
Figure 2: Declining state government employment
2009 - Nov 2021, seasonally adjusted
Despite some encouraging signals in today’s report, the continued drop in public sector employment is a worrisome sign. No matter how much pump-priming results from the Build Back Better and Infrastructure bills, in whatever form they may finally be passed, the gap between today’s employment situation and one of full employment will not be eliminated without a rebound in public employment. Contracting with private sector firms to improve and build new infrastructure may do just that. But these sorts of policies are at best an indirect employment stimulus.
An Unstable Recovery
November 5, 2021
The November 5, 2021 Employment Situation report from the BLS shows a slight decline in the U-3 unemployment rate, which fell from 4.8% in September to 4.6% in October. Dropping from 7.67 million in September, the count of unemployed workers came in at 7.42 million. The total employment level increased by nearly half a million to just over 154 million. The labor force participation rate has remained within a narrow range since mid-2020, fluctuating between 61.4% and 61.7%. In this note, we explore these labor market indicators to show what lies behind these aggregate figures.
- Job losers continue to make up the largest share of the unemployed
- The labor force participation rate has stagnated
- While more people are moving from unemployed to employed than from unemployed to not-in-the-labor-force, the ratio is declining.
- Dramatic inequality in unemployment across social groups persists
The average number of weeks spent in continuous unemployment by the unemployed in October was 26.7 weeks. Though down from an average of 31.6 weeks in June of this year, and falling ever since, this length is still well above the pre-pandemic average of 21 weeks. Job losers remain the largest segment of the unemployed (50.9%) when considering the unemployed by reason for unemployment. The share of job leavers amongst the unemployed increased to 11.5% in October. Although the share of job leavers has grown since April 2020, 11.5% is still lower than in the years immediately preceding the pandemic.
Figure 1: Unemployed by reason for unemployment, 2010 - Oct. 2021
According to the BLS, fewer than one million job leavers are to be found within the unemployed population, a level hardly distinguishable from the 2014-2019 average. Unemployed reentrants, a term referring to those who have started actively searching for work (unsuccessfully so far) after a spell out of the labor force altogether, make up 30.2% of the unemployed. The remaining share of unemployed workers is made up of new entrants to the labor market (7.4%).
Labor force flows
Examining labor force flows often reveals a more dynamic picture of the employment situation than the stock measures discussed above. For example, comparing the flows from unemployment to employment to those from unemployment out of the labor force indicates whether unemployed workers are more likely to end up employed from one month to the next or to transition out of the labor force entirely. Either transition contributes to a lower unemployment rate though the implications for assessing the employment situation are quite distinct. This ratio stood at 1.15 for the September-October period. In other words, for every unemployed worker in September who had transitioned out of the labor force by October, 1.15 were employed the following month. On the whole, unemployed workers are still more likely to transition into employment rather than ‘non-participation,’ those not as likely as in the years before the pandemic. However, as is generally the case, the unemployed in any given month are by far most likely to be unemployed in the following month rather than employed or out of the labor force.
Figure 2: Flows from unemployed to employed / unemployed to not-in-labor-force, 2010 - Oct. 2021
Unsurprisingly, when we disaggregate the unemployed-to-employed (UE) and unemployed-to-out of the labor force (UN) ratio by social groups, we see staggering disparities in the flow of workers from unemployment into employment across groups.
Unemployment across social groups
Unemployment is unevenly distributed amongst the working population. The ratio of Black to white unemployment continues to move back to the persistent pre-pandemic ratio of 2:1. The unemployment rate for white workers is down to 4.0%, with unemployment rates among Black workers the same as last month at 7.9%. The unemployment rate among Hispanic or Latine workers has moved down to 5.9%.
Figure 3: Unemployment rates by race and ethnicity, 2010 - Oct. 2021, seasonally adjusted
The unemployment rate among Black men increased three percentage points to 8.3%. More Black men found employment month-over-month, and more were not able to find a job, with an overall increase in the labor force participation.
Youth unemployment (16-19 year olds) has been somewhat of an anomaly in the current recession, at least in comparison to those of the past. Unlike unemployment rates for most other groups, that for workers aged 16-19 has been lower in the past few months than before the onset of the pandemic. Similarly, the employment for this group is more or less back to its pre-pandemic level. In fact, the 5.47 million 16-19 year olds employed in May 2021 was the highest level for this group since 2009. The October employment data shows a stall in this pattern. Youth unemployment increased from 11.5% in September to 11.9% while the employment level fell slightly to 5.3 million. Yet despite the similarity in employment levels and unemployment rates for this group to pre-pandemic times, youth unemployment rates remain in the double-digits, a calamity by any measure. Also, gains in youth employment are not evenly distributed across social groups. Black youth employment levels are down, along with an increase in the Black youth unemployment rate.
Total employment increased by about half a million people to just over 154 million. Just like unemployment, the distribution of employment gains differs substantially across the population. As in July of this year, the Black employment level once again declined slightly in October. White, Hispanic/Latino, and Asian employment levels all rose. Part-time workers make up about 16% of all those employed, a share which is similar to that in 2019 and lower than most of the years following the 2007-09 recession.
Labor force participation
Finally, the unemployment and employment data should be considered in the context of overall labor force participation. For well over a year now, the labor force participation rate has remained within a narrow range, fluctuating between a lower bound of 61.4% (June 2020 and January/February 2021) and an upper bound of 61.7% (August 2020 and April/July/August 2021). It was 61.6% in September. The labor force participation rate for October 2021 remained within the band, coming in once more at 61.6%. On the eve of the pandemic, the labor force participation rate was generally well above 63%, having failed to return to the 66% range recorded in the years prior to 2008.
Figure 4: Labor force participation rate (civilian), 2000 - Oct. 2021, seasonally adjusted
High shares of job losers amongst the unemployed, a labor force participation rate that won’t budge, and only a slightly higher likelihood of unemployed workers transitioning into employment instead of out of the labor force — collectively these features of the October Employment Situation point towards a sputtering recovery. While the fall in the headline unemployment rate and growth in employment are encouraging, there are many ongoing disparities in the recovery. Crucially, a more robust recovery in employment requires safe and healthy workplaces. Far too many have already suffered over the past two years from exposure to unsafe environments and dangers at work. EDI will be closely monitoring these data in the coming months and releasing regular updates in addition to other commentary on the U.S. labor market.