Friday, February 3, 2023: Economy Added 517k Jobs in January; Unemployment Rate Down Slightly to 3.4%
The “Great Resignation” Continues: Black Unemployment Near Record Low
Several Pieces of Good News for Recruiters
The economy added 517,000 total nonfarm payroll jobs in January, well over double the number from the 223,000 nonfarm jobs added in December, the U.S. Bureau of Labor Statistics (BLS) reported in its latest monthly jobs report. The January unemployment rate was 3.4 percent, down from 3.5 percent in December. Job growth was led by gains in leisure and hospitality, professional and business services, and health care. Employment also increased in government, partially reflecting the return of workers from a strike, the BLS noted.
Short-term and Long-term Unemployment Nonetheless Increased
The numbers for total unemployment are reported in a chart here. Unemployment (seasonally adjusted) for 5 to 14 weeks was 31.1 percent, up from 28.4 percent in December. The rate for unemployment of 15 to 26 weeks was 15.5 percent, up from 14.3 percent in December. The unemployment rate for 27 weeks and over was 19.4 percent, up from 18.5 percent in December. The number of long-term unemployed (those jobless for 27 weeks or more) was 1,111,000 in January, up from 1,069,000 in December.
So how can unemployment increase but the unemployment rate nonetheless decrease? More people are dropping out of the workforce as employers know only too well.
Labor Force Participation
In January, 2023, both the labor force participation rate, at 62.4 percent, and the employment-population ratio, at 60.2 percent, were unchanged after removing the effects of the annual adjustments to the population controls, the BLS explained. (This is because this is a 220 million plus worker database and requires very large monthly shifts in employment and unemployment to move those percentages of the whole database.) These measures have shown little net change since early 2022 and remain below their pre-pandemic February 2020 levels (63.3 percent and 61.1 percent, respectively), the Bureau noted. This means that a smaller percentage of people the Bureau determines are available to work are working now than were working before the COVID-19 pandemic gripped the United States in February 2020. Here is your proof that the “Great Resignation” is continuing.
Heads Up for Recruiters: There are almost 10 million “fish in the sea,” available to be hired. The number of persons employed part-time for economic reasons (meaning that they want a full-time job), at 4.1 million, was also little changed in January. The number of persons not in the labor force who currently want a job was 5.3 million in January, little changed from the prior month. These two recruitment pools are the primary target market for recruiters unless they set their sights on wooing away a competitor’s employees and independent contractors. It is baffling to economists and labor experts why these almost 10 million workers wanting full-time jobs are not employed given that there are job openings available in virtually every industry at many of the levels of the companies in those industries.
Among those not in the labor force who wanted a job, the number of persons marginally attached to the labor force, at 1.4 million, changed little in January. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was also little changed over the month at 342,000. Another baffling number, unless they do not like the pay or have the knowledge, skills and ability to perform the job they wish to have.
Three-month Jobs Report Comparison Data: Good News For Recruiters
The White House Council of Economic Advisor’s Blog reported that:
“Job growth in November, December, and January averaged 356,000 jobs per month [see chart below], an acceleration from the prior three months of August, September, and October but a slowdown from the last three months of 2021. (emphasis added) Since monthly numbers can be volatile and subject to revision, the Council of Economic Advisers prefers to focus on the three-month average rather than the data in a single month, as described in a prior CEA blog. So, as the economy continues to slowly cool down, there are fewer available jobs even while there are still more jobs than there are workers to fill them. But as the available jobs go down, a recruiter’s chances to successfully recruit increase.
That three-month average and the recent 12-month average show a dramatic slowdown in hiring in 2022 and into 2023 as the U.S. economy slowly winds down as the Federal Reserve continues to raise the costs to home buyers and those corporations borrowing money.
To illustrate current and recent legacy data on job growth, the Council shared the following chart:
“This report also contained the annual benchmark revision, which adjusts the level of jobs previously estimated as of March 2022,” the Council also pointed out. “That revision added 568,000 jobs to the previously estimated level of jobs in that month.” More information on those revisions is here.
Among other notes, the Council also reported that:
- monthly nominal wage growth ticked down to 0.3 percent in January;
- labor force participation rates for workers aged 16 and over and prime-age (25 to 54) workers have seen substantial recovery from their pandemic lows; and
- the unemployment rate in January was 3.4 percent, the lowest rate since May 1969. [But, unemployment rates are a false indicator these days of both the availability of jobs or the health of the economy since we can no longer expect workers to look for jobs when they are unemployed].
Major Worker Groups
The BLS chart below illustrates the numbers for the major worker groups:
Our chart below details the rate changes for the past three months among the major worker groups:
For Black workers, the unemployment rate of 5.4 percent was near its record low of 5.3 percent in October 2022, the White House Council of Economic Advisor’s Blog pointed out, adding that data for Black workers go back to 1972. The unemployment rate rose for both Hispanic/Latino and Asian workers, and ticked up for White workers, the Council also noted.
“Looking over the last 12 months, the unemployment rates for American Indian and Alaska Native workers and workers of two or more races have declined, while it has increased for Native Hawaiian and Pacific Islander workers, although these data are highly volatile,” the Council observed.
BLS has additional, interactive graphs available here.
See Also