Blog Post #2

Brandon Mayer
Dr. Kassens
April 18, 2014

     The number of unemployed and the unemployment rate remained relatively unchanged in March 2014, and both have changed little overall since December 2013 (BLS, 2014, 1). That being said, the number of unemployed as well as the unemployment rate have both decreased a decent amount over the course of the year. Judging by the unemployment rate alone, one would think that the employment situation remains unchanged from the last month. However, March’s report (BLS, 2014, 1) also indicates that nonfarm payroll employment rose by 192,000 people that month. How is it then that payroll employment is up but the unemployment rate remains unchanged? The answer likely lies in the trend of discouraged workers beginning to look for work again, which would include them in both the unemployed population and the labor force population. In this way, the addition of these formerly discouraged workers back into the numbers of labor force and the unemployed offsets the increase in nonfarm payroll employment, thus leaving the unemployment rate nearly unchanged from the last month as we see it here. However, the employment-population ratio and the labor force participation ratio do not appear to reflect this idea at a quick glance, as they remained nearly unchanged in March compared to the previous month.

                When one more closely examines Table A-1 (BLS, 2014, 11), the more precise data regarding these populations better shows how the 192,000 person increase in nonfarm payroll employment could be offset by increased labor force participation, leaving the unemployment rate relatively unchanged this month. Compared to last month, persons wanting a job increased as well as the number of employed, the employment-population ratio, the labor force participation rate, and the (civilian) labor force.  Measure U-5 in Table A-15 (BLS, 2014, 26) adds further weight to this argument, as it has gone down since last month and has been on an overall downward trend since March 2013. What do all of these trends within the data demonstrate? It is a fair guess to say that sentiment throughout the country about the ability to obtain work has become much more positive, and hence more formerly discouraged workers are restarting the search for work. Judging by the trend over the last year, it is reasonable to assume that this increase in labor force participation will increase for the rest of 2014. The effect on the unemployment rate is more difficult to predict. It should be stated though that eventually the unemployment rate should begin to decrease, as the number of people rejoining the labor force will not offset the rise in the employed further along in the recovery. However, all of the analysis to this point reflects the standard measure unemployment rate (U-3), which does not account for differences across the segments of society.

                As of March 2014 (BLS, 2014, 4), there are clearly differences in the unemployment rate depending on race, age, and gender. Regarding race alone, Asians had the lowest unemployment rate while African Americans had the highest. On the average there is no difference in the unemployment rate between the genders, but the disparity grows when further broken down by race; such is the case for African Americans, with African American women having a lower unemployment rate than African American men. Age also plays a role in the unemployment rate, with age groups like teenagers experience higher unemployment than others. Essentially, the disparities in the measures based on demographics mean that general trends of society as a whole do not necessarily correlate perfectly with segments of society. Therefore, the above trend analysis and prediction should be interpreted with demographics kept in mind in order to ensure the pertinence of the findings.

References

Bureau of Labor Statistics (March 2014). The Employment Situation – March 2014. Retrieved from
     http://www.bls.gov/news.release/pdf/empsit.pdf