Unemployment Rate Falls Again In March, Economy Adds 216,000 Jobs
In March, the U.S. economy added 216,000 new jobs, beating Wall Street expectations and continuing a trend of solid job growth. This is the second straight month of gains in the 200,000 range -- the benchmark number that economists say the American economy must hit, month over month, in order to bring the unemployment down to pre-recession levels in 5 years.
The unemployment rate dropped from 8.9 to 8.8 percent, according to the Bureau of Labor Statistics data released this morning. The labor force participation rate held steady, indicating that the pool of millions of Americans who have grown too discouraged to seek work have not begun to return to the job market.
"It's a good report, a little better than expected, especially the dip in the unemployment rate for the right reasons," said Stuart Hoffman, an economist at PNC Financial Group. "More people are finding work. It's not just people disappearing in the statistical cracks," he said.
In January, for instance, the unemployment rate fell from 9.4 to 9 percent -- but only 36,000 new jobs were created. "What's been missing in the economy is job growth: well, we've now got two months of job growth back to back of over 200,000 jobs in the private sector," Hoffman said.
During the recession, the size of the American labor force shrank, as discouraged job seekers simply gave up looking for work and disappeared from government statistics. The current labor force measurements, some economists say, may be more representative of the actual U.S. workforce.
"The labor force participation rate has stabilized," said Wells Fargo economist John Silvia. "We're looking at a labor force now that's a fair assessment of people actually in the labor force -- I think those people have just gone out of the system. I think we're looking at a new labor force participation rate, and a real distinction in terms of employment growth by sectors."
But other economists who follow the labor force participation rate closely caution that it's too early to say whether the millions of Americans who dropped out of the labor force are gone for good.
"There are still five unemployed workers per job opening, far worse than the worst month of the early-2000s recession," Heidi Shierholz, an economist at the Economic Policy Institute, wrote in an email. "That’s not exactly a hospitable environment in which to enter [the labor force]. Let’s wait until there is actually a reasonable chance of finding a job before we declare these folks gone forever."
The economy added jobs in professional and business services (+78,000), health care (+37,000), leisure and hospitality (+37,000), and mining. Employment in manufacturing continued to grow as well (+17,000), while employment in state and local government continued to shrink. Local government has lost 416,000 jobs since an employment peak in September 2008.
"I think because we've seen some pretty decent gains, we can start to get beyond the problem of just saying whether the economy is improving or not, and get more into the hardcore labor market issues," Silvia said.
For Silvia, it boils down to education: in March, the unemployment rate for Americans with a bachelor's degree and higher is 4.4 percent. But if you take away the college diploma, the unemployment rate rises to 9.5. Of those Americans who didn't finish high school, 13.7 percent are officially looking for work.
But those numbers look almost rosy when you compare them with the unemployment rate of black Americans, which rose in March to 15.5 percent from 15.3 percent.
"I think the bigger story in this report is that clearly the labor market for black Americans looks very bad," said Dean Baker, economist and co-director of the Center for Economic and Policy Research. "It's clear that there's been almost no improvement from the trough of the recession for African Americans."
For Baker, the story is less about the month over month increase in black unemployment, but rather the overarching narrative of a growing racial divide.
In October 2009, the national unemployment rate peaked at 10.1 percent and that headline number has been slowly inching down. But for black Americans, unemployment has been hovering between 15 and 16.5 percent for nearly two years.
The economy has gained more than a million jobs in the past year but is still 7.5 million jobs short of pre-recession levels.