Unemployment rate obsession

Market players and financial journalists are hyper-focused this week over the April unemployment report, which is due Friday, following a shaky March report.

But the unemployment rate and job growth are inadequate measures. Adding people who can only get part-time work or have given up looking, for example, nearly doubles the  unemployment rate of 5.5%.


Some of the rate’s recent improvement is due to boomers swelling the retirement ranks. Workforce participation – the share of people 16 or older who are working or looking for work – has dropped from 66% to under 63% since 2008.

Analysts — and the journalists who cover them — focus largely on the two headline numbers because they move markets.  Here are other yardsticks to help you get the full story:

  • Gallup’s payroll-to-population rate. It counts adults working at least 30 hours a week for an employer and divides them by the population. March: 44.1%, the highest for that month since tracking began in 2010. This omits some part-timers and all self-employed workers, but it’s broader than official measures and unaffected by most changes in the makeup of the workforce.


  •  Welch Consulting, an economic research firm, produces an index of full-time equivalent workers, which washes out changes in the size and age of the population. March: 98.3, unchanged from February but up 1.1% from a year earlier. It was launched at 100 in 2004. The index also shows that women have recouped recession job losses but men remain 3% shy of that mark.


  • Turnover. The Bureau of Labor Statistics’ March report is due next Tuesday. The Job Openings and Labor Turnover Survey shows how many jobs are open and how many workers were hired, laid off, fired or quit. The latter is considered an acid test of workers’ confidence. Federal Reserve Chair Janet Yellen has said she follows it closely. In February, quits hit 1.6%, up from 1.4% a year earlier. The survey showed 5.1 million openings or 3.5%, up from 2.9% a year earlier. Calculated Risk blog offers details.


-Paul Overberg


3 thoughts on “Unemployment rate obsession

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