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Heritage Foundation
Long-Term
Unemployment Remains High Despite Strong February Job Gains
James Sherk
March 04, 2016
The Bureau of Labor Statistics’ February jobs report showed continued
growth in the labor market. The payroll survey reported that employers
added 242,000 net new jobs last month. The payroll survey showed
unemployment remaining unchanged at 4.9 percent.
Even more encouragingly, unemployment stayed flat despite over half a
million (+555,000) new workers entering the labor force. In the
aggregate, almost all these new labor force participants found jobs. As
a result, the labor force participation increased 0.2 percentage points
to 62.9 percent—its highest level in almost two years. Although labor
force participation remains well below pre-recession levels, it has
moved in the right direction since the fall.
The establishment survey showed job gains concentrated in a few
sectors: Retail trade (+55,000), health care and social assistance
(+57,000), and leisure and hospitality (+48,000) accounted for
two-thirds of the net job gains. The mining sector continued to
contract, with the job losses (-18,000) driven primarily by lower
energy prices reducing the demand for domestic drilling. Revisions to
the December and January surveys also revealed that employers created
30,000 more jobs than previously estimated.
However, not all aspects of the labor market improved. Average hourly
wages declined 3 cents in February. Over the past year, average hourly
wages had risen 2.2 percent. (This low nominal growth is partly driven
by low inflation—over the same period, inflation grew 1.3 percent).
Average work hours also fell: The length of the average work week
dropped by 0.2 hours.
Worse, the number of Americans stuck in long-term unemployment did not
budge despite the robust job growth. In February, 2.2 million
unemployed workers had been searching for work for at least six months.
In the aggregate, the new hiring did not reach the long-term
unemployed. This explains why the average duration of unemployment
remains stuck at almost seven months (29 weeks).
Although the economy has improved over the past year, the labor market
remains considerably weaker than before the recession.
Read this and other articles at The Daily Signal
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