Last week’s jobs report for May by the Bureau of Labor Statistics shows that unemployment grew for the first time in three months, albeit very slowly, up one-tenth of a percentage point to 8.2 percent. Good news or bad news? The news coverage has focused on the “bad,” but the truth is, it’s probably a little of both.
There are several ways to look at unemployment data. First is to look at the official monthly unemployment figure, that 8.2 percent. But that’s only part of the picture. It doesn’t include unemployed people who aren’t looking for work, or who are working part time but would prefer full-time employment. When you include those people, the unemployment figure is much higher, around 14.8 percent for May. That figure is also up compared to April, by 0.3 percentage points.
The Labor Department also looks at the Labor Force Participation Rate (LFPR). The LFPR is the percentage of working-age individuals (16 to 65 years old) who either have a job or are looking for one. The LFPR for May was also up slightly – to 63.8 percent, an increase of 0.2 percentage points – after declining in each of the previous two months, indicating that some unemployed workers have started looking for work again. This signifies to some analysts growing public confidence in the economy, even if it is not yet creating lots of new jobs.
Another way to look at the labor market is to measure the ratio of 25 to 54 year-old employed workers to the total population of that age group. Using this group helps ensure that labor trends reflect actual changes in the job market rather than the impact of employee retirement or young people newly entering the work force. According to Economic Policy Institute economist Heidi Shierholz, the percentage of this age group with a job declined dramatically in the early years of the recession, but has shown some improvement recently.