Although the Bureau of Labor Statistics announcement that the economy added 203,000 jobs in November has been welcomed as positive news, the overall numbers show that the labor market remains a concern. Mercatus Center senior research fellow Keith Hall, a former BLS commissioner, notes that the labor force participation rate is still worryingly low.
“At 203,000 jobs this month and an average of 189,000 per month so far this year, we have averaged about the same rate of job growth as last year, and the unemployment rate rebounded from last month’s rise, dropping to 7.0 percent. However, while the November data is generally positive, it is hard to be too encouraged when labor force participation remains so low.
“After dropping by whopping 720,000 last month, we added back just 455,000 to the labor force. Over the past two months, the size of the labor force as a share of working age population (62.8 and 63.0 percent, respectively) has been at its lowest level in nearly 35 years.
So far this year, the working age population has grown by 2.2 million, but the labor force has declined by 217,000. This decline in the labor force has been entirely responsible for the drop in the unemployment rate over the past 11 months from 7.8 to 7.0 percent. In fact, if the participation rate had held constant this year, the unemployment rate would be a full percentage point higher at 8.0 percent.”