Unemployment Improves to 7.2% But Participation Drops
Although economists expected the unemployment rate to stay put at 7.3 percent, the latest jobs report shows a slight drop to 7.2 percent, the lowest unemployment rate in five years. While that news is neither negative or positive, labor force participation continues to decline.
The unemployment report shows that 133,000 total net jobs were created last month which means 144,303,000 Americans are now employed. Although the growth hasn’t always been promising, that is a net increase of 2,150,000 more Americans employed than when Barack Obama took office. The highest unemployment rate under the Obama Administration has been 10.0 percent in 2009, 2.7 percent above where the country is now.
While the number of Americans employed has increased, the number of people dropping out of the labor force entirely has as well. More than 130,000 people over 16 have stopped looking for work entirely over the past month, bringing the total number of Americans not in the labor force to 90,609,000. In 2009, that number was 80,507,000 – more than 10 million fewer people.
The decline in labor force participation has been driven by the retirement of Baby Boomers but also a drop in female employment. In 2009, 59.4 percent of women were in the labor force. Today, that number is down to 57.1 percent. Another culprit is the growing youth unemployment rate. The official unemployment rate for Americans 18 to 29 is 11.2 percent. When adjusted for those who have given up looking for work, that number skyrockets to 15.9 percent nationally and 20.9 percent for African-Americans. That is approximately 1.7 million young adults who have given up looking for work and do not count against the unemployment rate.
The latest jobs report calculated data from September and does not account for fallout from the government shutdown which sent the economy into uncertainty for more than two weeks. While the shutdown may have had negative effects on the economy, seasonal hiring is expected to pick up by November which means an expected temporary spike in employment until the end of the holidays.