5 Ways to Tell If Unemployment Is Really As Bad As You Think
In July, the headline unemployment rate in the United States edged up 0.1 point to 6.2 percent, close to the lowest rate since the financial crisis. Total non-farm payroll employment increased by 206,000, the sixth straight month of 200,000+ job gains, and the total number of unemployed persons clocked in at 9.7 million.
At a glance, the news was great. The unemployment rate is down 1.1 points and the number of unemployed persons is down by 1.7 million on the year. The Federal Reserve, playing doctor, continues to signal faith in the recovery by scaling back its asset purchase program and is on track to end purchases in October. Fed policymakers project that headline unemployment will close out 2014 between 6 and 6.1 percent, a more optimistic outlook than was offered in June.
In March, Fed Chair Janet Yellen said that, “The economy and the labor market have strengthened considerably from the depths of the Great Recession.” By many measures, the little recovery that could looks like it has reached, or is very close to, the top of the mountain.
But labor market data is opaque, and just because we think we see a peak doesn’t mean we’re done climbing. You don’t have to look very far to see that the headline unemployment figure isn’t showing you the whole picture. “While there has been steady progress, there is also no doubt that the economy and the job market are not back to normal health,” Yellen said in the same speech. “In some ways, the job market is tougher now than in any recession.”
By looking at metrics like the labor force participation rate, the number of marginally attached workers, the number of job openings and labor turnover rates, and the employment-to-population ratio, we can build a much more robust picture of what is actually going on in the labor market.