This morning’s jobs report was a big negative surprise and underscored the fact that a robust jobs recovery, even now, has not yet solidified. The job growth of 88,000 in March was far lower than the 2012 average increase of 183,000. It is important to keep in mind that the month-to-month numbers can be volatile, however; in this case the first quarter average growth rate is likely a better measure of the underlying trend. But at 168,000 per month, the average growth rate of the first quarter is not even close to what we need — at that rate we would not get back to the pre-recession unemployment rate until late 2019.
The unemployment rate ticked down to 7.6 percent in March, but not for good reasons. The decline is due to people dropping out of the labor force, not an increase in the share of the working-age population with jobs. In fact, the labor force participation dropped to its lowest point of the downturn, 63.3 percent. What’s more, the weak labor force participation is not due to demographic factors like retiring baby boomers; the labor force participation rate of the “prime-age” population, people age 25-54, is also at its lowest point of the downturn, 81.1 percent. It’s the lack of job opportunities – the lack of demand for workers — that is keeping these workers from working or seeking work, not other factors.