May jobs report shows correlation between unemployment rate, labor force participation

It seems there’s no way for the unemployment rate to drop while the number of people looking for a job is rising.

May’s jobs report from the U.S. Bureau of Labor Statistics (BLS) indicated a slight decline in the number of people who have given up on looking for a job. But that ever-so-slightly positive bit of news was attended by a sine qua non: As a meager handful of people re-enter the labor force and begin looking for work, the unemployment rate rises.

In May, 92,986,000 otherwise-eligible people were not participating in the labor force — meaning that the only thing keeping them from looking for a job is the conviction that it isn’t worth the effort. But that number — more than one-quarter of the all-ages population of the entire county — represents a decline from a month earlier, when the labor force non-participation rate stood at 93,194,000.

At the same time, May’s unemployment rate rose, inching to 5.5 percent from 5.4 percent in April. As you likely know, the unemployment rate itself is optimistically skewed, since it does not consider the 90 million-plus eligible workers who have elected not to participate in the labor force.

We write a lot of these articles about jobs — usually once a month, when the BLS report comes out — and we typically focus on the negative aspects of the reports, since so much of the mainstream reporting on the BLS data is all about positive spin. So it’s worth paying lipservice to the idea that it’s a good thing that more people are viewing the U.S. economy as an environment that might — just might — have a few more economic opportunities for them to pursue.

But the May numbers really don’t show much changing, other than the possibility that the public zeitgeist has shifted — maybe — to view the job market as a place where a few more people stand a chance at landing an actual job.

Both the unemployment number and the labor force participation rate number barely budged; and as one improved, the other predictably worsened. The actual labor force participation rate improved by only one-tenth of 1 percent in May, up to 62.9 percent.

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