Are There Workers Left on the Sidelines?

A long economic recovery and historically low unemployment pulled many Americans back into the labor force in recent years—and now there are few left on the sidelines.

Economists expect the  unemployment rate to hold at 4.1% in November, matching the lowest level in nearly 17 years. But perhaps more telling, a broader measure of unemployment and underemployment—known as the U-6—fell in October to match the lowest level recorded since 2001. The Labor Department will release the November figures for both measures Friday as part of the jobs report.

That U-6 measure, which includes Americans stuck in part-time jobs and those too discouraged about their prospects to look for work, had remained elevated since the recession ended relative to a falling unemployment rate.

But the spread between the two measures narrowed in October to 3.8 percentage points. It was the smallest difference recorded since the recession began in 2007. The gap is the same as the average spread between 1994 and 2007.

What does that mean?

The share of Americans on the fringe of the labor market has returned to historically normal levels. As those workers on the margins have been absorbed, the long-running demographic trend of older Americans retiring in growing numbers could show up more clearly.

That may help explain why the unemployment rate is falling this year.

It fell at a fairly steady pace from late 2009 until late 2015. Then plateaued for a year after touching 5% for the first time since the expansion began. The rate resumed its descent this year, falling from 4.8% in January.

The leveling of the unemployment rate coincided with a jump in Americans entering the labor force. The U.S. labor force grew by 3.02 million workers in the 12 months ended in September 2016. That was the largest increase in a 12-month span, outside of Census hiring, since the late 1970s.

In the past year, labor-force growth cooled considerably, increasing by 738,000 from a year earlier as of October. As more Americans exit the labor force via retirement, it will be difficult for the U.S. to significantly grow its workforce.

With the labor force growing slowly and hiring progressing at a steady clip, the unemployment rate is trending lower.

That’s not to say that all workers are satisfied with their pay, hours or position. But simply, the job market has become healthy enough to provide a job to nearly all the people seeking one.

RELATED

The October Jobs Report in 9 Charts (Nov. 3)

Hiring Rebounds in October, Unemployment Rate Falls to 4.1% (Nov. 3)

October Jobs Report – The Numbers (Nov. 3)

from Real Time Economics http://ift.tt/2j24Gct