The Labor Market Situation in July

Office of Economic PolicyAugust 4, 2014

Dr. Jennifer HuntDeputy Assistant Secretary, Microeconomic

Analysis

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Private sector employment up 198,000Total nonfarm up 209,000, sixth consecutive month over 200,000

1-month change, in thousands• July 2014

198• June 2014

270• May 2014

22812-month change, in thousands

• July 2013 to 2014:

2,479• Average:

207

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Sustained growth in 3 month moving average

This has been the highest job growth in the first half of a year since 1999.

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Employment growth by super-sector this month

0.2%

0.2%

0.2%

0.4%

0.1%

0.1%

0.1%

0.9%

0.2%

0.1%

0.1%

0.0%

0.1%

0.2% 1

2

3

7

7

8

8

11

17

21

22

27

28

47

-5.0 5.0 15.0 25.0 35.0 45.0 55.0

Utilities

Information

Wholesale Trade

Other Services

Financial Activities

Transportation and Warehousing

Mining and Logging*

Government

Education and Health Services

Leisure and Hospitality

Construction*

Retail Trade*

Manufacturing*

Professional and Business Services*

Over-the-month employment change, July 2013, seasonally adjusted, in thousands

Source: Bureau of Labor Statistics, Current Employment Statistics, bls.gov/ces*denotes significance

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Unemployment rate ticked up

July 2014 6.2%

June 2014 6.1%

May 2014 6.3%

July 2013 7.3%

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Long-term unemployment rate steady, remains double pre-recession average

July 2014: 2.0%

June 2014: 2.0%

May 2014: 2.2%

July 2013: 2.7%

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Employment rate was flat

July 2014: 59.0%

June 2014: 59.0%

May 2014: 58.9%

July 2013: 58.7%

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LFPR ticked up

July 2014: 62.9%

June 2014: 62.8%

May 2014: 62.8%

July 2013: 63.4%

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Ratio of broad to standard unemployment highest ever

Over-the-monthOver-the-yearchange

change• U1 — 0.0

↓1.0pp • U2 — 0.0

↓0.7pp • U3 ↑ 0.1

↓1.1pp • U4 ↑ 0.1

↓1.3pp • U5 ↑ 0.2

↓1.1pp • U6 ↑ 0.1

↓1.7pp

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Other

Last month, all employment growth appeared to be part-time

This month, even growth

No changes in earnings

No change in hours

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Actual and predicted LFPR

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Evolving LFPR

U.S. LFPR generally rose from the early 1960s through 2000– The increase was largely due to increasing participation by women

LFPR then fell quickly– Part of the reduction was due to the Great Recession– Part reflected predictable aging of the population– Part is unexplained

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Decomposition of change in LFPR

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The role of population aging

Older workers have been participating at higher and higher rates since the 1990s– In terms of overall LFPR, this increase is not enough to counteract

the increase in older worker share– Older workers still participate at a substantially lower rate than

younger workers

Aging has contributed to about half the observed LFPR reduction since 2007

Predicted LFPR ranges from about 60 to 62 pp in 2024

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LFPR of 55+ year olds

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Alternative scenarios for the participation rate

Thank you!

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Yet again, more jobseekers gave up looking than found work.

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Long-term unemployed are increasingly more likely to leave the labor force than find employment