The Real Unemployment Rate – February 2019

There's a lot more to a monthly employment picture than the jobs added or lost and base reported unemployment rate, especially against the backdrop of economic concerns that have been overstated due to the stock market correction in December followed by the partial government shutdown. As we saw in December the jobs economy was still surging through year-end. As for January’s highlights, the great news continued. In the first month of 2019, we had a headline unemployment rate of 4%, 304,000 were jobs added and negative revisions total 70,000 jobs, so the net number was actually +234,000. The top three industries for hiring were healthcare, food service, and entertainment. 

There was strength pretty much everywhere. The unemployment rate was artificially skewed higher due to furloughed government employees who filed for unemployment. The government numbers continue to contain massive revisions and overall hiring accelerated to an average of 241,000 jobs per month over the past three months. Now the actual unemployment rate once underemployed and long-term unemployed people are accounted for is 8.1% down from 8.2% year over year.

I’m not going to spend too much time parsing the details here because again, these numbers are skewed by furloughed government workers who really were/are employed but were able to collect unemployment in addition to receiving full back pay, even if they didn’t work at all during the 35 days and were just voted a 2.6% raise last week in Congress. But that's a different topic for a different story. 

Other key takeaways were, when the long-term unemployed, marginally attached and underemployed are factored in, the real unemployment rate is more than double the base reported rate. Those unaccounted for in the base unemployment rate include 1.3 million long-term unemployed, 5.1 million are underemployed and 1.6 million are marginally attached to the workforce. The labor participation rate improved again to 63.2%, that's the best in 5.5 years.

Photo by Joe Raedle/Getty Images

 

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