April 2014 was essentially a flat month for the U.S. employment situation. The number of employed fell across the board for each of the age groups we track, but at relatively low numbers:
Overall, the unemployment rate fell in April 2014 because of a sharp increase in the number of Americans who are no longer being counted as being part of the U.S. labor force. For Econtrarian Paul Kasriel, that data presents a mystery:
In the 12 months ended April 2014, there has been a 0.5 point net decline in the labor participation rate, the civilian labor force as a percent of the civilian noninstitutional population. In these same 12 months, there has been a 1.2 point net decline in the headline unemployment rate. Given the decline in the participation rate, a statistic that the media has been trained to focus on when interpreting a decline in the headline unemployment rate, can we conclude that the decline in the headline unemployment rate overstates the improvement in labor market conditions because potential workers are choosing not to “participate” in the hunt for jobs due to weak job prospects? No, because in these same 12 months there has been a 1.3 point decline in the U-5 unemployment rate, which accounts for labor force dropouts due to weak job prospects.
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