Elvis Choi
Dr. Kassens
Econ 122
December 10, 2015

Bureau of Labor Statistics (BLS) published the report November Employment Situation Report on December 4, 2015. This article is going to talk about the three major labor market statistic of employment in the report: unemployment rate, employment population ratio, and the labor force participation rate.

In general, according to the report, unemployment rate was 5.0 percent in November. Comparing to 2014, unemployment rate decreased from 5.8 percent to 5.0 percent, down by 0.8 percent. (“The Employment Situation-November 2015”, 2015) From the website of Freud, the natural rate of unemployment is about 5.05 percent. Because the actual unemployment rate and the natural unemployment rate are so close, one thing can be strongly considered is the current unemployment doesn’t include cyclical unemployment but mainly consists of frictional unemployment and structural unemployment. (Mankiw, 2012, p. 301). Employment population ratio unchanged, remained at 59.3 percent. Labor force participation rate is slightly changed to 62.5 percent. (“The Employment Situation-November 2015”, 2015) 

For different group’s unemployment rate, those groups which have significant difference are selected.

In category Race, Asian people has the lowest unemployment rate among all other group, at 3.9 percent, lower than the average rate at 5.0 percent. (“The Employment Situation-November 2015”, 2015)

One possible reason is that they are hard-working so that they are more productive and competitive in labor market. Black or African American has the highest unemployment rate among all other group, at 9.4 percent, almost the double of average. (“The Employment Situation-November 2015”, 2015)

The reason why they have such rate maybe they are not treated fairly in the society.

Teenager (16 to 19 years) has the higher unemployment rate, at 15.7 percent, more than the triple of average rate. (“The Employment Situation-November 2015”, 2015)

According to the Mankiw, minimum wage law would be one of the reasons to cause that. In normal market, supply and demand would be adjusted until reaching the equilibrium point such that supply equals demand. But the price of labor cannot go down because of minimum wage law as it should be. As a consequence, supply and demand are not balanced. There are more surplus of supply and some of the teenagers cannot find a jobs. It influences a lot to teenagers as their equilibrium wage should be likely lower then minimum wage because they are not skillful and experienced. (Mankiw, 2012, p. 311) For the disability people, they have a huge increment in unemployment rate, from 10.8 percent 2014 to 12.1 percent 2015 (“The Employment Situation-November 2015”, 2015), a high and rapid boost rate. It is abnormal to observe this result in the situation that average unemployment tends to decrease. It is a very interesting phenomena.

For the same criteria in employment population ratio and labor force participation rate, other groups are chosen.

In category Sexual, women has low employment population ratio (54.0%) and low labor force participation rate (56.8%) than men (65.1%, 68.6%). (“The Employment Situation-November 2015”, 2015) The difference is so obvious. Both of them has more than 10 percent difference. A suggested reason would be women are more often to take the responsibilities of family such that they are not able to work full time.

In category disability people, they have an extremely low employment population ratio (16.8%) and low labor force participation rate (19.2%). (“The Employment Situation-November 2015”, 2015) It is understandable as not all of the disability people are able to work and they are not competitive comparing to others.

For 2016, there are some predictions anticipated below:

Unemployment rate would not decrease as fast as the same speed in 2014 (0.8% per year). (“The Employment Situation-November 2015”, 2015) Because it is very close to the natural rate of unemployment. According to Mankiw, natural rate of unemployment is “the amount of unemployment that the economy normally experiences.” There are always people who are searching job. That’s why natural rate of unemployment is not zero percent. (Mankiw, 2012, p. 298, 305) And in US, it is about 5 percent (FRED Graph - Unemployment rate). Unemployment rate would fluctuate around the natural rate of unemployment so that the difference of unemployment rate between 2015 and 2016 would be smaller.

Labor force participation rate and employment population ratio would remain the same or decline little. The reason why the decline may happen can be found in the report called “Labor force projections to 2024”. (U.S. Bureau of Labor Statistics, 2015) It mentioned that since 2000, the people of baby-boom generation are going to step in their 55 years old or older group. There are a lots of people not in the labor force and as a result the labor force participation rate would probably decrease. At the same time, with the fact that civilian non-institutional population is approximately 0.8 percent per year (Table 1. , 2014), more population and low participation rate causes a bigger decline in employment population ratio, which may occur in 2016.

Reference:

FRED Graph - Unemployment rate. (n.d.). Retrieved December 10, 2015, from https://research.stlouisfed.org/fred2/graph/?g=NxS

Mankiw, N. (2012). Principles of macroeconomics (6th ed.). South-Western.

The Employment Situation-November 2015. (2015, December 4). Retrieved December 10, 2015, from http://www.bls.gov/news.release/pdf/empsit.pdf

Table 1. Projections of the Population and Components of Change for the United States: 2015 to 2060. (2014). Retrieved from United States Census Bureau website: https://www.census.gov/population/projections/files/summary/NP2014-T1.xls

U.S. Bureau of Labor Statistics. (2015, December). Labor force projections to 2024: the labor force is growing, but slowly: Monthly Labor. Retrieved from http://www.bls.gov/opub/mlr/2015/article/labor-force-projections-to-2024.htm