Unemployment Drops but Participation Remains Unchanged

Filed in Jobs, Unemployment by on February 6, 2012 7 Comments

The jobs report on Friday showed a decline in the unemployment rate from 8.5 percent in December to 8.3 percent in January.   With this decline, the unemployment rate has now fallen 0.8 percentage points over the past five months.  

An encouraging piece of news is that this is due to people going into jobs and not due to people dropping out of the labor force.  While the labor force participation fell in January from 64.0 percent to 63.7 percent, this is purely the result of a technical revision the Bureau of Labor Statistics (BLS) does every year. With each January’s report, BLS updates its adjustments for population and this year the update was based on the 2010 Census. According to the 2010 Census, population grew mainly among younger and older individuals and among immigrant women. All these groups have lower participation rates, so this adjustment brought down participation down by 0.3 percentage points. Thus, excluding the impact of these technical adjustments, the labor force remained unchanged from December’s level.

Further underlying the good news is that the steady decline in the unemployment rate is being driven by more people finding jobs rather than because people have stopped looking for work. The number of unemployed people has fallen by 1.2 million, while the number of people with jobs has risen by 1.9 million over the past five months. A broad measure of the share of the population with a job, the employment-to-population ratio has ticked up from 58.3 percent in August 2011 to 58.5 percent in January. 

Changes in Labor Force Indicators Since August 2011, Seasonally Adjusted. Source: Current Population Survey, January 2012.

January’s decline in the unemployment rate was broad based with all racial and ethnic groups seeing declines.  The drop in the unemployment rate was especially sharp among African-Americans. Over-the-month, their unemployment rate fell from 15.8 to 13.6 percent. While a decline in the labor force participation rate accounted for part of this decline (0.4 percentage points and much of this decline was due to the population adjustment), it was primarily driven by a sharp increase in employment. While these measures can be volatile on a monthly basis and were impacted by some technical adjustments to the survey, the African-American unemployment rate has been steadily trending down from its high of 16.7 percent in August 2011.

Hispanics also experienced declines in their unemployment rate in January.  The unemployment rate among Hispanics fell to 10.5 percent from 11.0 percent in December. The rate has been steadily trending down since November 2010, and it has fallen 0.8 percent points since August.

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Comments (7)

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  1. Jesus will see to it that this country will be alright!!!

  2. Maya says:

    Great news. I’m happy to see that more people are finding jobs.

  3. pascual rodriguez says:

    very import tha coment.

  4. carol murray says:

    Many jobs that are available are low pay with little or no benefits, maybe instead of just counting the amount of jobs being created each month, we need to check and look at the salaries offered with a job. Many people are living paycheck to paycheck now, with no ability to save for retirement, so what is this going to do to our economy in future years? Is retirement going to send a person on “welfare” or will you just keep going at the job until you “drop dead” there? Five hundred new jobs created at minimum wage today, does not replace the five hundred jobs eliminated yesterday,that were paying over $ 13.00 an hour, plus benefits!!

  5. adaline says:

    the wage needs to be raised, around in this area the temp positions pay 8.50 to 9.00

  6. carta says:

    we need to continue in this way! Come on guys!

  7. O Salary says:

    Unemployment falling by 1.2 million – that is awesome!

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