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The Jobs Report Puzzle

Apr 5, 2013

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Reported by

Uri Berliner

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Lots of people are surely looking at today's jobs headlines somewhat puzzled, asking one significant question: How can it be that hiring was much worse than expected in March and the unemployment rate still fell — to 7.6 percent?

The answer isn't a happy one. There are a couple of ways the unemployment rate can fall.

In the good-for-workers scenario, employers hire more of the unemployed and they sign up new entrants into the workforce like high school and college graduates. That means more people working overall and fewer looking for jobs and unable to find them. The result: a lower unemployment rate

Unfortunately, that's not what happened last month.

In March, 496,000 people took themselves out of the labor force altogether, meaning they stopped searching for work.

When unemployed people quit looking for jobs it can lower the jobless rate. But for all the wrong reasons. Hiring was weak in March. The 88,000 jobs employers added aren't even enough to keep up with population growth.

So that March drop in the unemployment rate to 7.6 percent likely has more to do with frustrated job seekers giving up than employers buying into the economic recovery.

See a chart of the labor force participation rate here:

Also:

U.S. Job Growth Slows As Jobless Face Benefit Cuts

22 Million Americans Are Unemployed Or Underemployed

NYC's Fast-Food Workers Strike, Demand 'Living Wages'

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