The March Jobs Report And The State Of The Recovery

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I can remember few jobs reports that were as unambiguously positive as the data released last Friday. Just about everything in the report was moving in the right direction, and for the most part, at a rapid pace.

Most obviously, the economy created 914,000 jobs in March. In addition, the January and February numbers were revised up by a total of 156,000. There was a decline of 0.1 percentage point in the overall unemployment rate, with the employment to population ratio rising by the same amount. The improvements were pretty much across the board. The unemployment rate for Blacks fell by 0.3 percentage points, the unemployment rate for Hispanics dropped by 0.6 percentage points, and the unemployment rate for workers with just a high school degree fell by 0.5 percentage points.

But to say things are moving in the right direction does not mean that they are good. We are still down 8.4 million jobs from last February, and if we add in the jobs that should have been created over this period, we are missing more than 10 million jobs. Six percent unemployment means 9.7 million people are looking for work and can’t find it. In addition, another 4.7 million have dropped out of the labor force, either because they have given up hope of finding a job or because family responsibilities in the pandemic are keeping them from working.

It also continues to be striking how concentrated the unemployment is. The share of long-term unemployed (more than 26 weeks) rose to 43.4 percent in March, a level exceeded in only a few months in the Great Recession and never reached before the Great Recession. Typically, unemployment is spread more widely, with many workers experiencing stretches of two or three months. This percentage of long-term unemployment indicates that many people lost their jobs near the start of the pandemic and have not been rehired.

Grounds for Optimism

With all appropriate cautions, it is still hard not to see things looking pretty bright for the immediate future and even better if Biden’s infrastructure package is approved. Just to start, while we certainly should not be happy about a 6.0 percent unemployment rate, in the recovery following the Great Recession the unemployment rate did not fall below 6.0 percent until September of 2014, so we are way ahead of that recovery.

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