Unemployment Drops but Labor Participation Stagnates

With the unemployment rate falling to 8.3 percent in January, a 0.8 percent drop over five months, The U.S. Bureau of Labor Statistics has revealed that the result is due to newly employed workers as opposed to people dropping from the labor force. Labor force participation sat at 63.7 percent in January, a slight fall from the 64 percent rate in December due to revised population data from the 2010 census which found that the population growth took place mainly among the young, the elderly, and female immigrants. These groups traditionally have lower rates of participation in the labor force.

Over the past five months, the number of unemployed has decreased by 1.2 million and the number of newly employed has increased by 1.9 million. The result has been a 0.2 percent increase of the employment-to-population ratio from 58.3 percent to 58.5 percent. The decrease in unemployment for the month of January was broadly distributed with every ethnic and racial group experiencing a decline; especially for African-Americans. Unemployment for the racial group fell from 15.8 percent in December 2011 to 13.6 percent in January. This reduction was in part due to a 0.4 percent decline in labor force participation, but mostly reflected a significant jump in employment. Furthermore, the African-American unemployment rate has experienced a steady downward trend since it peaked in August 2011 at 16.7 percent. Hispanic unemployment experienced a more modest 0.5 percent drop from December to January, falling from 11 percent to 10.5. This rate has also steadily fallen since August 2010 and is down 0.8 percent over that period.