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Brookings on Job Numbers

Steady Employment Gains Offer Sign of Continued Expansion

Private payrolls grew for the 39th consecutive month in May, increasing by 178,000. Perhaps coincidentally, this is exactly the same pace of job growth we have seen since March 2010 when the streak of private-sector employment gains began. Payrolls in the public sector, driven by a sizeable drop in federal employment, fell 3,000 in May. In the 39 months of private-sector job gains, federal, state, and local government payrolls have shrunk a total of 622,000—about 16,000 a month—offsetting 9% of the job gains in the private sector.

To put these numbers in perspective, the Census Bureau’s estimates of the working-age population suggest that about 80,000 new jobs a month are needed to keep the unemployment rate steady. If employment gains are faster than 80,000 a month we should expect to see a trend toward a lower unemployment rate. Of course, the unemployment rate is also affected by trends in the percentage of adults who want to hold a job. The deep recession caused the labor force participation rate to fall sharply in 2009, and the decline has continued through this year. Even though a sizeable part of the decline can be traced to population aging, we will nonetheless see some rebound in participation rates if Americans who are currently outside the workforce become more optimistic about their chances of finding a job.

The Labor Department’s household survey asks adults about their employment status and their efforts to find a job. The May survey showed a surge in the number of people who are either employed or looking for work. The number of employed increased 319,000 and the number seeking a job rose 101,000, producing an increase of 420,000 in the number of labor force participants. The participation rate edged up from its recent low in March and April. However, May’s big increase in the number of labor force participants offset equally big drops earlier in the year. Since January the number of people reporting they are either employed or looking for work has barely changed. The number with a job has increased 144,000 a month and the number looking for work has fallen 143,000 a month. If job growth remains at its current pace, however, we should expect to see more months like May in which the number of adults in the workforce climbs faster than the number of new jobs. In spite of the encouraging job numbers, both in the employer and household surveys, the unemployment rate edged up slightly in May, because the growth in employment fell short of the growing number adults in the workforce.

The fraction of adults who hold jobs held steady in May. Among Americans age 16 and older 58.6% were employed, roughly the same employment-to-population ratio we have seen since December 2011. This indicator seems to suggest the nation has made scant progress in recovering from the recession. A more accurate interpretation is that progress, at least in the job market, has been slow but steady. Because the adult population is growing older we would have expected the employment-to-population ratio to have fallen by slightly more than a half percentage point since late 2011, even if the nation enjoyed full employment. I estimate that U.S. employment would have to increase between 7 million and 7.5 million for the job market to return to full employment. Over the past 39 months we have made fairly steady progress toward closing the job gap, but the pace of improvement remains painfully slow.


For more recent analysis by Brookings experts on how weather and seasonality have affected the latest jobs numbers, visit our page on adjusting the monthly jobs numbers.

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