NEW YORK (MainStreet) — The Bureau of Labor Statistics released its March jobs report on Friday, and the results are pretty depressing. The good news, such as it is, came from an unemployment rate which held steady at 5.5%. Unfortunately given the disproportionate share of service and retail sector job creation, the unemployment rate remains a marginal measure of prosperity.
The other numbers are profoundly troubling, and may indicate that the economy is beginning to slow down.
Job creation was far below expectations. The economy added 126,000 new positions, far below the 245,000 that economists predicted. This was less than half of February’s growth. (By way of context, the Hamilton Project estimates that if the U.S. added 208,000 jobs per month it would take until 2020 to return to full employment.) The BLS has also adjusted its growth estimates down for January and February, putting the recent quarter at an average growth of 197,000 jobs per month.
This report ends 12 straight months of job growth above 200,000.
Which brings us to the labor force participation rate. This is the measure of how many people work or actively seek it. At its most benign this statistic measures our retirees, students, stay-at-home parents and lottery winners. It also, however, captures the percent of discouraged workers who wait in the wings for the economy to improve before returning to an active job search.
Labor force participation is back down, returning to the 36-year low that it reached late last year.
University of Chicago economist Allen Sanders suggested that the decline in labor force participation rate on its own should not be a subject for concern, attributing the decline to retirement and education… mostly.
“Some would say that’s just a continual aging of the labor force,” he said, “a changing of the demographics as more and more people hit retirement age while at the other end of the spectrum they’re staying in school longer.
He believes there's some truth to that theory.
"But what’s also true is that we’ve had a small decline in the labor force participation rate in prime age workers, which is people 25 – 54 years," he said. "That one tends to be more of a concern.”
The economic concerns that this month’s job report raises may shake the potential for an interest rate hike by the Federal Reserve. Although several officials have indicated that the board was considering a rate hike pegged for this summer, a slowing economy may force the Fed to push that decision off until later this year when wages may have had a chance to catch back up and possibly put upward pressure on consumer prices.
-Written for MainStreet by Eric Reed, a freelance journalist who writes frequently on the subjects of career and travel. You can read more of his work at his website A Wandering Lawyer.