April 2017 Unemployment Update

Friday, ahead of the release of April’s unemployment numbers, we took a look at the unemployment situation under the Trump administration. The numbers are out, and conclusions in: unemployment improved last month, but underemployment improved even more

In keeping with the trends we saw in the first three months of 2017, the labor market has continued to tighten, with the official U-3 unemployment rate dropping to 4.4%, a level last seen in 2006. 

January February March April 4-Month

Change

U-3 Unemployment Rate 4.8% 4.7% 4.5% 4.4% -0.4%
U-6 Unemployment Rate 9.4% 9.2% 8.9% 8.6% -0.8%
Civilian Noninstitutional Population* 254,082 254,246 254,414 254,588 +506
Civilian Labor Force 159,716 160,056 160,201 160,213 +497
Employed 152,081 152,528 153,000 153,156 +1,075
Unemployed 7,635 7,528 7,202 7,056 -579
Employment-Population Ratio 59.9% 60.0% 60.1% 60.2% -0.3%
Part-time for Economic Reasons 5,840 5,704 5,553 5,272 -568
Marginally Attached to Workforce 1,752 1,723 1,595 1,534 -218
  • Discouraged Workers
532 522 460 455 -77
* All numbers are in thousands

(For more details on the calculations behind these numbers, see our Lamppost on unemployment.)

The detailed numbers show that the decline in unemployment was almost entirely attributable to unemployed workers finding jobs, rather than unemployed workers dropping out of the workforce, or large changes in the size of the workforce in general.  The decline in the rate isn’t drastic, but the same can’t be said for the change in the U-6 rate, which dropped from 8.9% to 8.6%.  The scale of the change is largely due to almost twice as many workers moving from involuntary part-time work to full time as moved from unemployed to employed; it would appear that employer demand for additional hours from their established workers is quite strong.

A couple of other points of note:

  • Coverage of the U-3 rate in the mass media frequently includes a note that “the economy needs to add 120,000 jobs per month to keep pace with growth in the workforce.”  We can see that the Civilian Labor Force has risen at roughly that rate for the year-to-date.
  • The spread between U-3 and U-6 continues to drop, though it is still significantly higher at 4.2% than the previous low of 3.5% during the Bush administration, much less the 3.0% spread under Clinton.  If the economy remains strong, where the gap stabilizes will provide important insight into whether the labor market is undergoing a long-term decline in employment quality.
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