U.S. Participation Rate Edges Up in Sign of Job-Market Healing
(Bloomberg) -- A closely watched measure of labor supply in the U.S. improved last month, underscoring some progress in the labor-market recovery but also showing the persistence of hiring challenges for employers in the months ahead.
The share of Americans who were either employed or looking for work last month edged up to 61.8%, the highest since March 2020 but still well below pre-pandemic levels, according to data from the Bureau of Labor Statistics Friday. The participation rate among those ages 25 to 54 was little changed at 81.8%. For those 55 and older, it remained unchanged after declining in the prior month.
Among demographic groups, the picture was mixed. Participation among Black workers declined, driven by the lowest rate among Black women 20 years and older since March. The rate among White and Asian workers was little changed. Meantime, participation among Hispanic workers jumped to 66.3%, the highest since March 2020.
For months, depressed participation has haunted employers desperate to meet demand. Across industries, businesses have raised wages to attract workers and fill a near-record number of positions. Even so, factors ranging from early retirements to care giving to the ongoing pandemic have left the U.S. with a limited supply of workers.
Average hourly earnings rose 0.3% in November and were up 4.8% from a year earlier, both slightly below the median estimates in a Bloomberg survey of economists.
Looking ahead, the tight labor pool may lead to additional wage increases to lure employees back, a trend that risks fueling consumer prices even higher. Federal Reserve officials, including Chair Jerome Powell, have already suggested winding down the central bank’s asset-purchasing program even faster amid widespread pressure to address the rapid pace of inflation.
“A sustained increase in the participation rate, which still has recovered only about half the Covid-induced drop, is essential if wage growth is to revert to a pace consistent with the Fed’s medium-term inflation target,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note.
The report also indicated more structural shifts in the workforce. The number Americans unemployed for 27 weeks or longer has improved in recent months but is still 1.1 million higher than pre-pandemic levels. The number of people not in the labor force but who want a job remains about 850,000 higher than in February 2020.
©2021 Bloomberg L.P.