Statement by Chad Stone, Chief Economist, on the March Employment Report
Today’s solid jobs report shows a labor market that continues to improve gradually, but that remains far from healed. With the share of the population with a job stuck at recession levels (see chart) and long-term unemployment still very high, it’s too soon for the Federal Reserve to begin raising interest rates — and it’s well past time for lawmakers to restore emergency federal unemployment insurance benefits that expired in December.
Fortunately, the Fed seems to recognize that it still must keep interest rates low. “The recovery still feels like a recession to many Americans,” Fed Chair Janet Yellen said in a recent speech, “and it also looks that way in some economic statistics.” Yellen pointed to an unemployment rate that remains higher than it ever was in the 2001 recession or its aftermath; to high long-term unemployment (the percentage of the unemployed and of the labor force looking for work for at least 27 weeks), the abnormally high number of people who want a full-time job but can only find part-time work, and the continued slide in labor force participation (the share of the population working or actively looking for work) well past the formal end of the recession. Labor force participation edged up in March, but stronger growth in demand for goods and services will be needed to restore normal labor market conditions, and monetary policy has been the main governmental support for stronger growth.
While the Senate has recognized that long-term unemployment remains a significant concern and is poised to vote to reinstate the Emergency Unemployment Compensation (EUC) program that lawmakers allowed to expire in December, the Republican House remains obdurate in its opposition. EUC provides needed financial assistance to workers who lose their jobs through no fault of their own and cannot find work before their regular state jobless benefits run out. It also boosts consumer demand for goods and services, supporting the recovery.
EUC is a temporary program that shrinks automatically as the job market improves and people can more easily find jobs. Policymakers have always allowed past temporary federal jobless benefit programs to expire, but never before with long-term unemployment (those jobless for 27 weeks or more) as high as it is today. Well over a third of the unemployed, and 2.4 percent of the labor force, have been out of work for six months or more. Before the Great Recession, the long-term unemployed never amounted to more than 26 percent of the unemployed, even during the deepest recessions since the end of World War II, and they were never more than 1.3 percent of the labor force when any of the past seven emergency programs expired.
About the March Jobs Report
Businesses reported solid payroll growth in March. The separate household survey also showed strong employment gains and a pickup in labor force participation. The unemployment rate held steady at 6.7 percent.
- Private and government payrolls combined rose by 192,000 jobs in March and the Bureau of Labor Statistics revised job growth in January and February upward by a total of 37,000 jobs. Private employers added 192,000 jobs in March, while overall government employment was unchanged. Federal government employment fell by 9,000, state government fell by 2,000, and local government rose by 11,000.
- This is the 49th straight month of private-sector job creation, with payrolls growing by 8.9 million jobs (a pace of 182,000 jobs a month) since February 2010; total nonfarm employment (private plus government jobs) has grown by 8.3 million jobs over the same period, or 169,000 a month. Total government jobs fell by 627,000 over this period, dominated by a loss of 378,000 local government jobs.
- After four years of private-sector job growth, private payrolls finally topped their pre-recession peak in March, but there were still 422,000 fewer jobs on total nonfarm payrolls than when the recession began in December 2007. Employers have added an average of 178,000 jobs a month so far this year, which is below the minimum of 200,000 jobs a month that would mark a robust jobs recovery.
- The unemployment rate was 6.7 percent in March, and 10.5 million people were unemployed. The unemployment rate was 5.8 percent for whites (1.4 percentage points higher than at the start of the recession), 12.4 percent for African Americans (3.4 percentage points higher than at the start of the recession), and 7.9 percent for Hispanics or Latinos (1.6 percentage points higher than at the start of the recession).
- The recession drove many people out of the labor force, and lack of job opportunities in the ongoing jobs slump has kept many potential jobseekers on the sidelines. Encouragingly, the labor force (people aged 16 or over working or actively looking for work) has grown in each of the last three months, although there is much ground still to be made up. The number of people with a job and the number of people looking for a job have increased in roughly the same proportion, leaving the March unemployment rate the same 6.7 percent it was in December. At 63.2 percent in March, the labor force participation rate is up from its recent lows (which were the lowest since 1978) but still slightly below its 2013 average of 63.3 percent.
- The share of the population with a job, which plummeted in the recession from 62.7 percent in December 2007 to levels last seen in the mid-1980s and has remained below 60 percent since early 2009, was 58.9 percent in March, slightly above its 2013 average of 58.6 percent.
- The Labor Department’s most comprehensive alternative unemployment rate measure — which includes people who want to work but are discouraged from looking (those marginally attached to the labor force) and people working part time because they can’t find full-time jobs — edged up to 12.7 percent in March. That’s down from its all-time high of 17.2 percent in April 2010 (in data that go back to 1994) but still 3.9 percentage points higher than at the start of the recession. By that measure, about 20 million people are unemployed or underemployed.
- Long-term unemployment remains a significant concern. Well over a third (35.8 percent) of the 10.5 million people who are unemployed — 3.7 million people — have been looking for work for 27 weeks or longer. These long-term unemployed represent 2.4 percent of the labor force. Before this recession, the previous highs for these statistics over the past six decades were 26.0 percent and 2.6 percent, respectively, in June 1983, early in the recovery from the 1981-82 recession. By the end of the first year of the recovery from that recession, however, the long-term unemployment rate had dropped below 2 percent.