The U.S. labor market is a mess. Data released over the past few months has been anything but positive and, in some cases, conflicting. Optimists have pointed at declining headline employment, pessimists have pointed at declining labor force participation, and somewhere in the middle, Main Street is looking at low job creation and wondering not when but if the job market will ever fully recover.
On Friday, the U.S. Bureau of Labor Statistics reported that payroll employment rose by 113,000 in January and headline unemployment fell by 0.1 percentage point to 6.6 percent. A consensus estimate showed that economists were anticipating closer to 180,000 new jobs for the month and for the headline rate to remain flat, at 6.7 percent. In a word, the results were weak — weaker than data released by payroll processor ADP on Thursday.
According to ADP’s National Employment Report, following December’s downwardly revised 227,000 job gain, U.S. employers expanded payrolls by 175,000 in the past month. “Cold and stormy winter weather continued to weigh on the job numbers,” said Moody’s Analytics chief economist Mark Zandi, whose firm helps compile the report. Taking a more optimistic tone, Zandi added that “underlying job growth, abstracting from the weather, remains sturdy.”
A couple of other metrics point to the idea that underlying job growth may actually be a reality. Labor force participation edged up 0.2 percentage points to 63 percent between December and January. This is still well below its pre-crisis level of around 66 and near lows last seen in 1970s, but hey, we’ll take what we can get.
Employment to population, as measured by the BLS, also increased. According to the agency’s calculation, 58.8 percent of the U.S. population was employed in January, up from 58.6 percent in December. The number of people with full-time work, though, is significantly lower, according to Gallup. Gallup’s payroll-to-population ratio fell from 42.9 percent in December to 42 percent in January, the lowest level since March 2011.
This is indicative of lots of people who are underemployed or who are working part time for economic reasons. Gallup also tracks underemployment. Gallup defines its underemployment rate as “the percentage of adults in the workforce who are unemployed or working part time but looking for full-time work.” Gallup’s measure was 17.2 percent in December and 18.6 percent in January.
Another way to measure underemployment is through the U-6 unemployment rate, which which counts not just those job seekers included in the U-3 (headline) rate, but also those who are marginally attached to the workforce (underemployed) and people working part time for economic reasons. In January, this rate edged down to 12.7 percent from 13.1 percent.