Client Note: More Jobs for Fewer Workers
By Matt McDonald, (202) 822-1205, mmcdonald@hamiltonps.com
To see the updated HPS cheat sheet, click here.
The good news? There are again more jobs in the latest economic data. The bad news? Once again, there are fewer people in the workforce applying for them.
As we noted in our preview yesterday, there remain concerns about a shrinking labor force, with both political and economic implications over the coming year. The December jobs report mirrored the November report in this respect, with incremental improvements in jobs data, and a shrinking labor force in the details.
We can assume that many of these people who have dropped out of the labor force during the recession would like to be working. At some point, they will re-enter the job market. When that happens, we are likely to see the unemployment rate go up for a period before again declining. Politically, the President’s reelection campaign would like to see this happen sooner than later; economically, we have not yet reached that point.
Because the labor force declined, and the …
Client Note: Where Are The Workers?
By Matt McDonald, (202) 822-1205, mmcdonald@hamiltonps.com
For the pre-release jobs day cheat sheet click here.
We have seen the glimpse of a jobs recovery over the past several weeks. Unemployment claims have continued to fall below the key 400,000 level, with the most recent 4-week rolling average at 373,000. Likewise, the ADP payroll estimate came in at a robust 325,000 new jobs for December.
While some of these forward-looking numbers hold promise, the actual jobs numbers so far have been middling. Hopefully the numbers tomorrow will turn that around. But the real missing piece for a true recovery in the job market has been workers. Even as the unemployment rate dropped from 9 percent to 8.6 percent last month, a little over half of that decline was due to workers dropping out of the labor force.
Labor force participation averaged 66 percent through most of the 2000s. It now stands at 64 percent after declining again last month. If more people were still looking for jobs, and the participation rate were back up at …