Economic Indicators | Jobs and Unemployment

April job growth of 115,000 likely understates growth trend

The April 2012 employment report from the Bureau of Labor Statistics showed 115,000 jobs were added in April.  This is a drop from earlier in the year, but much of the slowdown is likely due to seasonal factors, namely unseasonably warm weather in the winter (e.g., the unseasonably warm January and February boosted economic activity and meant some employers hired then, instead of waiting until the spring).  Given that, the average job growth of the last three months—176,000 jobs—is probably the best measure of the current underlying trend.  This trend is above the roughly 100,000 jobs per month we need to keep up with population growth and keep the unemployment rate stable. The labor market thus continues to very slowly improve, but current growth is a far cry from the 350,000 jobs per month we would need to get back to full employment in three years.

MORE: Sort through updated graphs using data from today’s report

The unemployment rate ticked down by one-tenth of a percentage point to 8.1 percent in April, but that was due to people dropping out of the labor force, not an increase in the share of the working-age population with jobs.  The labor force participation rate dropped to its low of the downturn, 63.6 percent.

Young grads face grim labor market

This time of year, attention often turns toward the labor market prospects of new graduates. Though the labor market the Class of 2012 will face is stronger than the one faced by last year’s cohort, job prospects are still weak.  For example, over the last 12 months, the unemployment rate among workers under age 25 who have a bachelor’s degree and are not enrolled in further schooling averaged 8.5 percent (see the figure).  This is an improvement from the average at this time last year, 9.6 percent, but is still much higher than the 2007 average of 5.4 percent.  For detailed information on the employment and wage prospects of the Class of 2012 (both high school and college graduates), see this recent EPI analysis.

Labor force participation rate drops to lowest point of the downturn

Labor force participation dropped two-tenths of a percentage point in April to 63.6 percent, its low of the downturn, and far below its pre-recession rate of 66.0 percent in December 2007.  The labor force participation rate continues to slide largely because, despite the labor market slowly getting stronger, it is still a very difficult environment for job seekers, with unemployment over 8 percent, underemployment at 14.5 percent, and 41.3 percent of job seekers unemployed for more than six months.   Such an environment does not draw workers in.  It is unlikely that the workers who make up the decline in the labor force participation rate are going to join the labor force in large numbers until job prospects are strong enough that they won’t face months of fruitless job searching.

There are currently 2.4 million “marginally attached” workers (using our own seasonal adjustment calculation). These are workers who want a job, are available to work, but have given up actively seeking work. If these workers were in the labor force and counted as unemployed, the unemployment rate would be 9.5 percent right now (BLS calls this the U-5 measure of labor underutilization, and the April rate is a slight improvement from the March rate of 9.6 percent).

Public-sector losses continue to hamper the recovery

The public sector lost 15,000 jobs in April, mostly in local government.  Since the recovery officially began in June 2009, the public sector has shed over 600,000 jobs (more than 500,000 of which were local government employees, including over a quarter million in local government education, which is essentially K–12 public education).

Retail trade added 29,000 jobs, but some of that was likely positive “payback” from losses in February and March.  Temporary help services added 21,000 jobs, some of which was probably also due to a reversal of losses in March.  Both retail and temporary help services have been volatile in recent months.

Manufacturing added 16,000 jobs, almost all in durable goods.  The growth in manufacturing was a decline from its average gain of 41,000 jobs over the prior three months.  Employment in restaurants and bars increased by 20,000 jobs in April, compared with an increase of 32,000 jobs over the prior three months. Health care added 19,000 jobs, also below its average monthly growth of 32,000 jobs in the prior three months.

Construction declined by 2,000 jobs, but the negative weather payback in April likely disproportionately affected the construction industry.  Over the last six months, construction has added 6,500 jobs on average.

Wage growth remains weak

Though the unemployment rate is slowly improving, it has now been at more than 8.0 percent—higher than the highest rate of the prior two downturns—for more than three years.  The persistent very high unemployment exerts strong downward pressure on wage growth, since the lack of outside job opportunities for workers with jobs, along with so many unemployed workers relative to job openings, means employers don’t have to pay substantial wage increases to get and keep the workers they need. Average hourly wages for all private-sector workers increased by 1 cent in April, and at a 1.7 percent annualized growth rate over the last three months and a 1.8 percent growth rate over the last year.   As this plot shows, this is a substantial decline from the pre-recession rate of wage growth.

Demographic breakdowns

Unemployment in April 2012 was 7.9 percent for those age 25 and older with a high school degree but no additional education, and 4.0 percent for those age 25 and older with a college degree or more. While workers with higher levels of education have lower unemployment rates, workers at all levels of education have seen their unemployment rates roughly double since 2007, running counter to the notion that unemployment is high because employers are unable to fill their demand for workers with higher education credentials.

All major groups of workers have experienced substantial increases in unemployment over the Great Recession and its aftermath. However, racial and ethnic minorities have been and continue to be hit particularly hard.  Unemployment in April was 13.0 percent for African American workers, 10.3 percent for Hispanic workers, and 7.4 percent for white workers (up 4.0, 4.0, and 3.0 percentage points, respectively, since the start of the recession). Racial and ethnic minorities have also been disproportionately hard-hit by underemployment.

Men saw a much larger increase in unemployment than women did during the recession, but have seen stronger improvements in the recovery. The unemployment rate reached its pre-recession low in late 2006 and early 2007, at 4.4 percent for men and 4.3 percent for women. Male unemployment peaked at 11.2 percent in October 2009, and has since fallen to 8.2 percent. Female unemployment continued to rise for another year, when it peaked at 9.0 percent in November 2010, and has since fallen to 8.0 percent.


Despite ongoing improvements, the labor market still has a deficit of close to 10 million jobs, and the lack of demand for workers means unemployment remains high and wage growth for people with jobs remains low.  The Class of 2012, for example, will be graduating into a labor market that, while an improvement over the labor market that greeted the Class of 2011, is still very weak.  As discussions take place this spring about what to do for these young workers entering a dire labor market, it is important to note that although young workers are a unique group, their currently high unemployment levels do not require a unique solution. The thing that will bring down the unemployment rate of young workers most quickly and effectively is strong job growth overall. Focusing on policies that will generate demand for U.S. goods and services (and therefore demand for workers who provide them)—policies such as fiscal relief to states, substantial additional investment in infrastructure, expanded safety net measures, and direct job creation programs in communities particularly hard-hit by unemployment—is the key to giving young people a fighting chance as they enter the labor market during the aftermath of the Great Recession.

— Research assistance provided by Nicholas Finio, Natalie Sabadish, and Hilary Wething

See related work on Jobs | Jobs and Unemployment

See more work by Heidi Shierholz