The jobs market is doing well and is on its way to being healthier than in a long time.
Some of the good news is obvious. And beyond the readily apparent good news, there’s even better news.
Start with the most recent shining positive development: Thursday’s Labor Department report that jobless claims fell to the lowest level in more than 45 years.
Low jobless claims mean that few people are getting laid off. And economists reckon that claims below the 300,000 mark mean that the unemployment rate is trending down. The claims numbers blew past that line a few years ago and have drifted lower.
The rarity of layoffs has helped send the unemployment rate to the lowest level in 18 years.
Already, unemployment is below where Federal Reserve officials think it can stay over the longer-run per the Bureau of Labor Statistics:
But the assumption that unemployment won’t go too much lower needs to be checked in light of other recent news.
For instance, job creation has barely slowed, even as the jobs recovery has stretched into an eighth year.
About 90,000 to 120,000 new payroll jobs are needed each month to keep up with population growth, according to the Federal Reserve. Recently, job gains have been about twice that.
Job creation that’s easily outpacing population growth each month? That doesn’t sound like an economy at full employment.
It appears that there are, or at least have been, plenty of people interested in jobs who aren’t counted in the official labor force because they weren’t actively looking for work.
Over the past few years, labor force participation has been flat. That’s a big surprise, because officials have long projected participation to keep falling as the Baby Boom generation retired:
That it hasn’t fallen is a suggestion that more potential hires are out there among people who haven’t been actively looking for work — people who otherwise might have opted for retirement, school, caring for relatives, or some other option outside the formal job market.
Digging into labor force status flows provided by the BLS, there’s reason to be optimistic that people are moving from outside the labor force straight into jobs.
During the worst of the recession, many people were quitting the job hunt and leaving the labor force entirely. And people who did begin looking for jobs were highly likely to find themselves unemployed — about as likely as they were to find work.
That has changed over the past few years, and now people are moving from outside the labor force to employed in the greatest numbers on record:
All of which is to say that the labor market looks healthy, but not so healthy that there isn’t room for much more improvement.
