The unemployment rate dropped to 5 percent in October, which is the lowest it has been since prior to the Great Recession. However, as encouraging as this number is, it does not take into account the Labor Participation rate, which remained at its lowest level since 1977.
The Labor Department reported that a healthy 271,000 jobs were added during October, up from 142,000 gained during September, when the unemployment rate stood at 5.1 percent.
The Business Insider reports that average hourly earnings also grew at 2.5 percent between Oct. 2014 and Oct. 2015, which is the highest growth rate seen since before the Great Recession.
“[T]he unemployment rate is close to what would normally be considered the threshold for full employment by the Fed and many private economists. However, the so-called slack that built up in the labor market after the recession has altered traditional calculations of how far unemployment can fall before the job market tightens and the risk of inflation rises,” according to the New York Times.
CNBC notes that many economists like to look to the U-6 unemployment figure, which takes into account part-time workers who would like to be working full-time. October’s U-6 rate was 9.8 percent, which is a drop of 2 tenths from September.
Another figure that is of great concern when considering the current employment numbers is the low labor participation rate. The Bureau of Labor Statistics reported that rate remained unchanged in October at a stubborn 62.4 percent. That figure is approximately 4 percentage points lower than prior to the Great Recession. It translates to a record approximately 95 million Americans remaining outside the labor force.
The last time the nation experienced such a low labor participation rate was 1977, during the “malaise” days of the Carter economy.