Good News from the Employment-Population Ratio

The employment-population ratio is a useful indicator and currently a positive one.

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The U.S. Bureau of Labor Statistics Employment-Population Ratio was 60.1 in March 2017, its first time at more than 60 percent since February 2009. This indicator actually shows what it purports to, unlike the U-3 unemployment rate.

The U-3 unemployment rate may fall if workers give up looking for work, as the labor market falters. As the labor market is recovering, the U-3 unemployment rate can rise because more people are re- entering the labor force as they start to look for work again.

The employment-to-population ratio, because it is unaffected by voluntary changes in labor force participation, is a useful indicator of current labor market conditions. Lows in the employment-population ratio correspond with economic downturns. The employment-population ratio holds clear and discernible implications for the labor market, both among and between segments of the population.

The employment-population ratio is a useful indicator and currently a positive one.

 

This article originally ran on the pmpaspeakingofprecision.com blog.