The State of the U.S. Labor Market: Pre-June 2017 Jobs Release
This column contains corrections.
On Friday, the U.S. Bureau of Labor Statistics, or BLS, will release its “Employment Situation Summary” for the month of May. Although President Donald Trump has been in office for more than four months now, the labor market trends originating in the Obama years seem to have continued.* Since the employment recovery began in February 2010, the U.S. economy has added more than 16 million jobs, and the steady tightening of the labor market has finally started to deliver wage growth for workers, with wages increasing 2.5 percent over the past year. However, some labor market indicators, such as labor force participation rates, have not returned to prerecession levels, leaving room for the labor market to continue improving. The economic priorities outlined in the recent release of the Trump administration’s budget are another concern. Despite campaigning on supporting working-class Americans, President Trump’s budget slashes workforce development and safety net programs that are essential for working families to get by—and this could have serious labor market effects.
With Father’s Day coming up on June 18, our pre-employment release column this month will include an analysis of the labor market for fathers as well as an overview of general labor market indicators to watch in evaluating the health of the labor market. Research in parental labor markets has generally focused on the motherhood wage penalty and the fatherhood wage bonus—women tend to make less and get promoted less once they’ve had children, while the opposite is true for men. However, parental unemployment is also a worthy topic of study, as research has shown that parental unemployment can have negative economic consequences for a child’s future. Here, we will compare the unemployment rates between fathers and childless men compared with mothers and childless women as well as among fathers by race. Overall, the labor market for dads is looking good—especially if you’re white and married. For the overall population, indicators other than the oft-cited headline unemployment rate, otherwise known as U-3, can provide a fuller picture of how the economy is performing. The employment rate, the number of people working part time for economic reasons, and the U-6 unemployment rate—all discussed below—are some of these factors.
The unemployment rate is at prerecession levels, but other labor market health indicators have yet to recover fully
While President Trump inherited a growing economy, there is still room for additional growth. Although the unemployment rate—the percentage of people actively looking for a job—is at prerecession levels, Figure 1 indicates that the employment rate—the percentage of the whole population that is employed—remains below prerecession rates, meaning that a larger percentage of people fall outside of the labor market now than in 2006. This likely indicates that many people have exited the labor market due to long-term unemployment and have not yet re-entered. It is good news that the number of long-term unemployed workers has continued to fall, but work remains to bring people back into the workforce. A recovery that reaches these workers is a key to long-term economic growth.
The number of people working only part time for economic reasons remains very high
The number of workers who are employed only part time for economic reasons—meaning that they are unable to find full-time work despite wanting it—remains high compared to prerecession levels. If workers are part-time because their hours are cut or because they cannot find a full-time job, that indicates a labor market that is less favorable for all workers. In April 2017, the number of involuntary part-time workers decreased to almost 5.2 million—still significantly higher than the precrisis low of 3.9 million in April 2006.
U-3 vs. U-6
The U-3 unemployment rate, the most common unemployment measure, can underestimate those who are unable to find jobs. For example, it does not capture the people who want jobs but have given up looking for work or the people who would like full-time work but can only find part-time positions. Perhaps the most comprehensive unemployment measure, U-6, alleviates this problem by including marginally attached workers—those who have recently looked for work but are not currently looking—and part-time workers who would prefer full-time work. A low U-6 indicates that people who face greater barriers in finding employment are being pulled back into the labor market due to greater economic opportunity. U-6 is always higher than U-3, but the gap grew much larger than usual during the recession and has remained above or near prerecession records over the course of the recovery.
The unemployment rate for fathers is low, while men without children struggle with high unemployment
Fathers have lower unemployment rates than mothers and both men and women without children. This differs from the national unemployment trends between the overall averages for men and women: Unemployment rates for men and women have mostly converged since the Great Recession, with women’s unemployment rate still slightly below that of men’s. Additionally, the disparity in unemployment between fathers and childless men is significant—men without children have more than 1.5 times the unemployment rate of fathers—while there is minimal difference between unemployment rates for mothers and childless women. Comparing men and women with and without children, men with children have the lowest unemployment rate while men without children have the highest rate.
This, combined with evidence on the fatherhood wage bonus, likely indicates that fatherhood offers significant employment advantages. One reason why the unemployment rate for fathers may be lower than mothers is that fathers are more likely to be married than mothers.** Married individuals tend to have lower unemployment rates than single individuals. However, other factors likely contribute to the low unemployment rate for fathers, such as cultural assumptions that fathers are better workers, discrimination against mothers, and changes in work hours or time off work after having children.
Unemployment rates for fathers of color are higher than the rate for white fathers
Unemployment rates for fathers overall are very low unemployment rate; however, this varies significantly by race. For example, the unemployment rate for African American fathers was just more than twice the rate for white fathers in 2016, as shown in the figure below. These findings align with overall unemployment trends for each race—in general, African American and Hispanic workers have higher unemployment rates than white workers. This likely indicates that although fatherhood has positive employment effects, it cannot completely make up for racial differences in employment. Additionally, like single mothers, single fathers have higher unemployment rates than married or divorced fathers, based on calculations using Current Population Survey data.
Friday’s employment data will provide an updated snapshot of how the U.S. economy and labor market are performing. Although the headline unemployment rate, U-3, is an important indicator, evaluating the health of the economy calls for a review of a variety of indicators. Additionally, as Father’s Day approaches, it’s important to understand the interaction between family structures and economic outcomes. Overall, fathers face good labor market conditions, but this varies by race for fathers and draws attention to mothers’ and childless men’s relatively worse labor market conditions. Focusing on decreasing parental unemployment, especially for the most vulnerable communities, could also help improve economic outcomes for children. This also highlights for the need for comprehensive paid family and medical leave to help all workers with different family structures balance life and work.
Annie McGrew is a special assistant for the Economic Policy team at the Center for American Progress. Kate Bahn is an economist at the Center.
*Correction, June 1, 2017: This column has been updated to reflect that President Trump has been in office for four months.
**Correction, June 1, 2017: This column has been updated to include a correct source for the information about fathers being more likely to be married than mothers.
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