The American unemployment rate has been falling. That’s good news. Tens of thousands of people have been finding jobs each month, and tens of thousands of people have been re-entering the workforce.
However, the job market still has a way to go to repair the deep damage done by the pandemic last spring. As the headline employment rate moves, long-term investors will scrutinize the labor market far beyond the monthly unemployment rate to get a sense of the underlying condition of the job market.
Investors were confident the sharp, deep and devastating drop in employment would snap back. The stock market reflected that optimism. As the employment gains have slowed month-over-month, investors want to see evidence jobless Americans are more confident with their opportunities and are looking for work again.
Here are three under-the-hood numbers to watch for with the release of the March jobs data.
Almost 10 million Americans were counted as officially unemployed in February. More than 40 percent of those have gone more than six months since they last worked. Shrinking that long-term unemployment is a struggle. Their skills can atrophy and they can become frustrated as it becomes more difficult to find work the longer unemployment stretches on.
Almost 2 million people could work and have looked for work sometime in the past year, but they haven’t actively sought employment in the past month. These two million people are not included in the monthly unemployment rate. And a half million of them don’t think there’s a job for them anyway. Both of these numbers also have been declining, and that’s encouraging.
In all, one out of every nine people who could be working in America aren’t. Before the pandemic it was one out of every 14. Not all of those who are unemployed have stopped looking for work. They may be back in school, taking care of a loved one, or had their job cut to part-time status.
Extended unemployment benefits, necessary stimulus checks, low wages for some occupations and companies leery of sustainable demand likely play roles in eligible working Americans staying on the sidelines of the economy. Getting them back in the job market is key to a sustainable recovery from the pandemic.