Current state of the Labor Market: Blog 2 - Morgan Routt

Current state of the Labor Market

Morgan Routt

     According to the most recent labor statistics, 6.7% of the work force was unemployed as of March 2014.  The highest rates of adult unemployment were centered on the nation's 2 largest minority groups; African Americans were at 12.4% and Hispanics at 7.9%.  Unemployment among Caucasians was at 5.8%, while Asians had the lowest unemployment at 5.4%.  The labor force participation rate was at 63.2%, which is slightly up from last month but still down from a year ago.  Economists believe the harsh January and February winter months of this year were responsible for the stagnant start to the year.

     The unemployment rate is reflecting a positive trend overall with a reduction of .8% since March of last year.  This trend is true for all groups except Asians, who have had a .4% increase in unemployment over the past year.  While these rates are at their lowest since the economic crisis of 2008, the unemployment rate would need to drop another 1% to 1.5% for the central bank to begin raising interest rates.  Current low interest rates are designed to spur borrowing to help businesses grow and hire more workers.  These rates have also allowed more affordable payments on homes and autos.  Low rates and nicer weather have allowed for a 1.1% increase in retail spending in March on items such as autos, furniture, and clothing.  This trend is expected to continue into April with continued nicer weather and an improved job market.

     Kiplinger projects unemployment will continue to modestly decline to around 6.3% by the end of 2014.  While good for the economy, this decline will most likely create inflation heading into 2015.  This inflation, while a concern, would result in higher wages.  There will be more spending resulting in higher retail prices and interest rates on borrowing.  As verification of this, the unemployment rate's gradual decline over the past year has caused an increase in overall wages by 2.1%.  This trend can be expected to continue into 2015.  While these numbers all appear to be good, they are still well below the pace of growth achieved during past economic expansions under President Reagan or President Clinton.  Anemic growth in key foreign markets like China and Europe have also allowed us to remain competitive globally.

     

     While private sector jobs have shown a slow but steady increase, federal government positions have fallen by 85,000.  Referring to overall job growth and unemployment rates, the United States has about another 2 years before it can be considered at normal employment according to Fed Chief Janet Yellen.  The Conference Board Consumer Confidence Index also moderately rebounded in March.  While consumers' assessment of the current job market has remained unchanged, the number of consumers who believe the job market will grow over the next few months slightly increased.

     Overall for the remainder of 2014, we can expect continued slow to moderate growth in most employment sectors, a slight increase in consumer confidence, and a slight increase to interest rates towards the end of 2014 heading into early 2015.

Sources:

The Employment Situation – March 2014. Bureau of Labor Statistics. (2014, April 4). Retrieved April 17, 2014, from: http://www.bls.gov/news.release/pdf/empsit.pdf

Payne, D., Somerville, G., Patterson, J., & White, G. (2014, April 3). Economic Outlook, Indicators, Forecasts - Your Business-Kiplinger. www.kiplinger.com. Retrieved April 18, 2014, from http://www.kiplinger.com/tool/business/T019-S000-kiplinger-s-economic-outlooks/

Prial, D. (2014, April 4). U.S. Adds 192,000 March Jobs, Unemployment Rate Holds at 6.7%. Fox Business. Retrieved April 17, 2014, from http://www.foxbusiness.com/economy-policy/2014/04/04/us-adds-12000-march-jobs-unemployment-rate-holds-at-67/?Intcmp=jobsreports

Barnes, P., Gasparino, C., & Freeman, J. (2014, April 16). Yellen: 'Normal' employment is two years away. Fox Business. Retrieved April 17, 2014, from http://video.foxbusiness.com/v/3475870353001/yellen-normal-employment-is-two-years-away/#sp=show-clips

Courter, C. (2014, March 25). The Conference Board. Consumer Confidence Index®. Retrieved April 17, 2014, from https://www.conference-board.org/data/consumerconfidence.cfm

 

Employment Report

The Employment Situation Summary for March released on April 4 gives a look into the overall employment situation for the US. To gauge the overall employment situation of the nation, a few different numbers are used. One figure that the bureau of Labor Statistics uses is the unemployment rate. This number looks at the number of people who are in the labor force, that are currently looking for work.

  The overall unemployment rate for March is 6.7% of the population, which remains unchanged since February.  Although this is a raise since January, it is a major decline from where the number was a year ago, almost a full percent decline. As the economy continues to recover from the Great Recession that started in 2008, we would hope to see this number continue to decline and go back to the natural rate of unemployment which is usually between 5 and 6%. The largest group that remains unemployed is teenagers, which remains constant from last month and from the previous year. When looking at different ethnicities, the group that has the highest unemployment rate are those that identify as Black or African American. This is a trend that was true for the past couple of months and for the previous year’s figures. A safe prediction for this percentage would be a continually decrease as the economy continues to recover.   

Another popular figure that used by the Bureau of Labor Statistics is the employment population ratio. This is the ratio of the number of employed workers over the total population of a country, in this case the United States. This ratio (58.9) has changed little over the past couple of months. This could be due to an increase in sector specific jobs that tend to increase in certain seasons and an increase in reentrants to the workforce. Because this number has had little growth over the last couple of months and with the changing seasons, I would expect for this trend to continue and if we were to see a change it would only be a few tenths of a percent upwards.

A third figure used by the BLS to gauge the employment situation is the labor force participation rate. This number looks at the proportion of the people that are eligible to be in the labor force against those that are actually participating in it. The rate for the month of March was 63.2%, which is a slight raise over where the number was in the previous two months. This could reflect the increased willingness for more people to enter the workforce, either because they are no longer discouraged or there is a new incentive for them to enter the labor force. This is in line with the shrinking unemployment rate and the employment population ratio trends and we would expect that this number would change similarly remaining either constant or with a slight rise. 

Works Cited

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

"Employment-To-Population Ratio Definition | Investopedia." Investopedia. Investopedia, n.d. Web.

Employment Situation

The Bureau of Labor Statistics has the responsibility of measuring unemployment. Adults age 16 or over are divided and surveyed into different categories for best results. First being is employed, referring to people who are working (full or part time) as well as those taking a leave of absence for vacation, pregnancy, etc. The next category is for those that are unemployed. Unemployed refers to people that do not have a job, but are capable of working, and have actively searched for a job within the past four weeks. The third and final category covers those that are not in the labor force due to college, children, and so on. The BLS measures this data every month for about 60,000 households and produces a report called the Current Population Survey (Mankiw, 2012, p. 298-9) This data is accessible to the public and analyzed frequently by economists and students across the country. 

Mankiw states that the unemployment rate can be defined as “the percentage of the labor force that is unemployed” (p. 299).  Unemployment has consistently decreased over the last two years, beginning at 8.2 in March of 2012 and ending at 6.7 in March of 2014. However, this statistic does not mean that the rate did not fluctuate through small changes throughout the years. Around December of each year, the unemployment rate increased and then rapidly decreased again after a time period of one month. Demographics such as race and sex are important to take into consideration when analyzing this data. This report shows that more women became unemployed while more men became employed. Whites, blacks, Hispanics, Asians, and teenagers had very slight changes in their unemployment rates. Out of those categories, teenagers hold the highest unemployment rate of 20.9% and Asians hold the lowest of 5.4% (Employment Situation, 2014, p. 1). The long-term unemployed are those that have not held a job for over 27 weeks. This category of people decreased over the year, thus concluding that more people were capable of finding a job. With these statistics and ideas in mind, it assumed that these trends will relatively stay the same for upcoming years. Society today proves that teenagers will continue to hold the fewest jobs due to the evident lack of higher education and overall need for a high substantial income. Discrimination is alive and well throughout this country. Until policy makers take this more seriously in regards to employment, these statistics will also remain relatively the same.  

The labor-force participation rate is explained by Mankiw as “the percentage of the total adult population of the United States that is in the labor force” (p. 299) or further defined as “the fraction of the population that has chosen to participate in the labor market” (p. 300).  For whites, blacks, Asians and Hispanics over 20 years old the participation rate increased the slightest bit in March. This data shows more people participated in the work force. However, for white and Hispanic teenagers the participation rate increased by almost 2.5 and for black teenagers the participation rate decreased slightly (Employment Situation, 2014, p. 12-14). One can assume that people with a lower education had more participation in the work force, and those with a higher education had less participation in the work force (Employment Situation, 2014, p. 15).  With more jobs being created, government legislation participation rates will increase as well. These statistics regarding race and education were not surprising, and it is expected to stay relatively close unless policies are made to prevent these factors from effecting the employment rate as strongly as they do.

To conclude, the slightest differences were seen in the employment-population ratio, which includes the individuals of the working age that are both employed and unemployed (“Employment-To-Population Ratio”, 2014). There seems to be a direct correlation between participation rate and the employment-population ratio, when one increased the other increased as well. This data is essential to policy makers to improve the employment situation for the country. Economists and policy makers can team up to help prevent a crisis regarding employment through using both there areas of expertise. 

Works Cited

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

Mankiw, Gregory. (2012). Principles of Macroeconomics: Sixth Edition. Mason, OH: South-Western Cengage Learning. 

Employment Situation Report

Ryan Raphael

Macroeconomics

Blog Write Up #2

Employment Situation Report

      Some of the major labor market statistics in this report include unemployment rate, unemployed persons, labor force participation rate, employment population ratio, and discouraged workers. This data is collected by the Bureau of Labor Statistics based on a survey of 60,000 households.

      The unemployment rate is one of the major labor market statistics, defined as the percent of the labor force that is unemployed. This is the number employed divided by the labor force. The labor force includes the total number of workers including the employed and unemployed. The report indicates that the current unemployment rate is 6.7 percent, and the number of unemployed persons is 10.5 million. Since January, there hasn’t been much fluctuation in the unemployment rate. In January, it was at 6.6, then in February it was at 6.7, and now it is currently at 6.7. These numbers are based on the total unemployment rate, 16 years and older. When looking at the data, there are higher rates of unemployment among certain races/ ethnic groups. For example African Americans have had a rate around 12 percent for the past three months. The rate for Latinos has slowly been decreasing from 8.4 to 7.9 in the past three months, but this is still higher than the overall unemployment rate. Another high category for unemployment is teenagers. They have an unemployment rate of 20.9 percent, which has been pretty consistent over the past three months. For the rest of 2014, I predict that the unemployment rate will fall slightly, staying in the 6^th percentile.

      One of the major problems of the unemployment rate is that it doesn’t account for discouraged workers. Discouraged workers would like to work, but gave up looking for a job, so they are classified as not in the labor force. This causes the unemployment rate to fall, making it seem like employment conditions are improving, when they really aren’t.

      Another key labor market statistic is the labor force participation rate. This is defined as the percentage of the adult population that is in the labor force. It can be calculated as he labor force divided by adult population. The current labor force participation rate is 63.2 percent. The trend of the data is very consistent. In November 2013 the rate was at 63 percent, December 2013 was at 62.8, January 2014 was at 63, and February 2014 was at 63. Participation rates do not vary much by ethnicity or gender. The most significant difference in participation rates are between white men over 20, and everyone else. White men over 20 have participation rates in 72^nd percentile, while everyone else have rates near 60 percent. The only other significant difference in participation rates are those between 16 and 19 years old. They fall under the 30^th percentile for labor force participation rates. Since there hasn’t been any significant fluctuations in the data, I predict that the labor force participation rate will stay close to the 63^rd percentile in 2014.

      One other important labor market statistic is employment population ratio. This has a very close trend to the labor force participation rate. The current employment population ratio is 58.9 percent. White males had the highest ratios, in the 68^th percentile, while white and African American women were in the 54^th percentile. I predict that the data will remain fairly similar in 2014 because there hasn’t been much variation in the past few months.

      Overall, the labor market categories I examined had fairly consistent data. The data mostly varied between ethnic groups and genders, but within those groups, the data had a consistent trend.  

Bibliography

Mankiw, N. G. (2012). Principles of microeconomics (6th ed.). Mason, OH: South-Western Cengage Learning.

The Employment Situation-March 2014. (2014, April 4). . Retrieved April 17, 2014, from http://www.bls.gov/news.release/pdf/empsit.pdf‎