One weakness of the unemployment rate is that if people drop out of the
labor force they cannot be counted as an unemployed person and the
unemployment rate goes down. They are no longer actively seeking work
and it might be because they are discouraged workers. The lower
unemployment rate can be misleading in this case. People dropping out of
the labor force might indicate a weak labor market.
We could look at the employment to population ratio instead, since that
includes those not in the labor force. But that includes
everyone over 16 and that means that senior citizens are in the group
but many of them have retired. The more that retire, the lower this
ratio would be and that might be misleading. It would not necessarily
mean the labor market is weak.
But we have this ratio for people age 25-54 (which also eliminates many college age people who might not be looking for work).
The
percentage of 25-54 year olds employed was 80.8% in Sept, down from 80.9% in
June-Aug. It was 80.6% in Jan. 2020 just before Covid. The 80.9% in June
was the highest since the 80.9% in April, 2001. 80.8% is higher than every month from June 2001 to May 2023. It was 80.1% in Dec. 2022
It was 80.6% in Jan. 2020 and 69.6% in April 2020. Click here to see the BLS data.
The unemployment rate was 3.8% in Sept. The labor force participation rate was
62.2% for all of 2022 and is now 62.8%.
The unemployment rate was 3.6% for all of 2022. Click here to go to that data
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