According to fresh numbers from the Bureau of Labor Statistics, economic growth is holding steady. Through the month of February, the U.S. economy added 215,000 jobs, and the unemployment rate remained at 5%.
The total number of unemployed persons in the U.S. is now at 8 million, a number that was unchanged. Wages increased slightly, with average earnings coming up at a total of $25.43 per hour. The number of discouraged workers among the 1.2 million marginally-attached in the economy came to a total of 585,000, and the civilian labor force participation rate remained at an overall figure of 63%
The headline employment rate is one of the most important economic indicators published by the BLS. With one simple number, the BLS is able to deliver a snapshot of the country’s economic health — as it relates to jobs, anyway. The BLS releases the new employment data once per month, creating a dynamic, flowing narrative to help visualize the strength or weakness of the labor market.
Digging deeper into the headline rate
While the headline unemployment rate figure does provide us a relatively easy way to get an idea of how well the economy is doing, it’s an incredibly dense number; that is, there’s a lot more to it than meets the eye. The labor market and overall economy are extremely complex, and trying to boil things down to one simple number doesn’t really give us an accurate picture of what’s going on.
To dig deeper and gain a more thorough understanding, there are a number of other indicators — most of which are included in the BLS report every month — that can help us piece together the entire puzzle. A great starting point is to look at the number of marginally attached workers, or discouraged workers. These are individuals who want a job and have searched for one, but have been unsuccessful for a long period of time. These individuals, though unwillingly unemployed, are not figured into the headline unemployment rate.
The BLS reported that there were 1.7 million marginally-attached workers in March — a number that remained steady for all of 2014, then dropped a bit during 2015, with hundreds of thousands of people having found work within the couple of years. This has been one of the trouble spots in the economy and one that policy makers are still struggling to address.
Another group to take into consideration are those who are working part time but would rather be working full time. Though many individuals in an economy, like students, for example, want and use part-time jobs to their advantage, part-time work can also be a disadvantage. Many companies are cutting hours in order to save costs associated with benefits and health care, and the result is that many workers are being forced to downsize to part-time positions. The number of involuntary part-time workers totaled 6.1 million in March.
As we can see in the graph below, incorporating part-time workers and the marginally-attached segments of the economy actually give us a clearer, albeit less pretty, picture of the labor market.
Labor force participation
In addition to those two things, taking a look at the civilian labor force participation rate can really help shore up a more accurate economic view. The labor force participation is calculated as the total number of unemployed people as a percentage of the civilian labor force. The labor force accounts for adults — or individuals over the age of 16 — who either are working or are looking for work. The calculation itself does not count individuals in the armed forces, those who are retired, institutionalized, and anyone unwilling or unable to work.
In March, the labor participation rate came in at 63%, as did the employment-population ratio at 59.9%.
Finally, with those things in mind, another incredibly important factor in gauging America’s economic strength is wage growth.
Wages have stagnated over the past few decades, and that has led to a lot of negative consequences in terms of increasing inequality and sluggish growth. Though we can see that there has been growth over the past several years in take-home pay, by many counts, we’re still far behind where we should be with inflation taken into account.
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