Quick Takes | Jobs and Unemployment

Labor force smaller than before recession started

The December jobs report shows continued improvements in the labor market, but they were modest. Payroll employment growth was just 103,000, average hours held steady at 34.3, and average hourly wages increased by just three cents. Though the unemployment rate dropped to 9.4%, around half of the improvement was due to 260,000 people dropping out of the labor force, leaving the labor force participation rate at 64.3%, a stunning new low for the recession. Incredibly, the U.S. labor force is now smaller than it was before the recession started, though it should have grown by over 4 million workers to keep up with working-age population growth over this period.
The good news in this report is that December caps off an entire year of job gains in the private sector. The bad news is that – three full years after the recession officially began – we are still near the bottom of a deep crater: the gap in the labor market remains on the order of 11 million jobs. December’s modest improvements were not enough to make much of a difference. –Heidi Shierholz

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