Unemployment is falling due to people leaving the labor force. While people may claim this is due to baby boomers retiring, there is very little evidence of this happening. Last month, the labour force shrank by 178,000 workers. There were 300K + people who moved from unemployed to not in labour force, according to labor force status flows, while only 228K moved from employed to out of labour force. The job gains do not seem to be doing much to increase labor market participation, mostly due to the rapid increase in multiple job holders.
People join and leave the labour force every month. Far to sporadic to be considered a consistent trend of anything substantial happening. You have one month where 1.5K workers enter the labour force. That probably offsets the -760K who left the labour force months later. Every month, since this recovery, the labor force offsets. A true trend of increasing labour market participation would have more consistency.1 month ≠ trend, and the trend is positive -- it's dropped almost 15% since 2010.
Plus, good news! People who dropped out of the workforce are, apparently, starting to rejoin the workforce:
The expiration of job benefits are contributing to this rapid growth in employment. This is a good and a bad thing. Its good because employment is growing. It's bad because:Job benefits mostly expired for many people last year, and are continuing to expire this year. Ironically, many conservatives claim this is has contributed to the drop in unemployment rates.
1) It's squeezing productivity, and this productivity squeeze is not going to be allowed to continue at the expense of corporate America who needs high earnings to justify the multiples their getting in the stock market.
2) The lack of job openings in high wage sectors forces individuals to seek employment at the highest possible wages they could find. Despite the fact that employment increases on an average of 265,000 a month, average hourly earnings only increases 0.1% - 0.3% a month.
It's really not a good thing that this trend is flat.A drop in the LFPR by 0.1% is negligible, especially since the trend (there's that word again!) is flat since mid-2013.
That's not complex. Complex is if you actually referenced the Beveridge curve.That's the most bizarre twisting of statistics I've seen in a long time. Congratulations!
Anyway. U3 is only one measure, and no one claims it's a complete measure. The Yellen Dashboard is more comprehensive, at the cost of being more complex:
Quits rate, job openings, hiring are trending up; change in participation rate is largely flat, maybe a tiny bit up since 12/2009; U3, U6, involuntary part timers, long-term unemployed are trending down. The only real issue is that wages are flat, and that might not be the case for long if we are genuinely near or at full employment.
If you're looking at the numbers rationally, rather than responding emotionally or in a partisan fashion, you'll see that it's a very good monthly report, and that things are looking up.
The last time the unemployment rate was this low and we've had this many job openings was in near 2000. However, the unemployment rate was in the low 4s. If anyone who wanted a job took a job yesterday, the unemployment rate would be around that level. Instead, workers are forgoing jobs that doesn't match their particular needs. Looking at the Beveridge curve shows a greater market inefficiency, possibly a case of structural unemployment.