Employment report: a mixed bag, but stimulus is helping

The Bureau of Labor Statistics released its monthly Employment Situation Report this morning. The headlines will announce an increase of 290,000 in nonfarm payroll employment and a jump in the unemployment rate to 9.9%. While employment grew, the labor force grew faster than usual, with 195,000 lured back into looking for work by better prospects in the job market. Even without these re-entrants, the labor force grew by 610,000 in April. So while trends are pointing in the right direction, the unemployment rate will continue to look bleak for quite awhile.

A broader measure of unemployment (called U-6, see Table A-15) includes those not in the labor force who want jobs and those working part-time because they can’t find full-time employment. This rate stood at 17.1% in April, up from 16.9% in March. However, the employment-population ratio improved to 58.8% an increase of 0.2% from March. So overall, with unemployment rates more or less stable, but participation rates and employment-population rates rising slowly for the past four months, the labor market is not getting worse, it’s just not getting much better. This is all pretty much as expected, if not reassuring for the 15.3 million unemployed people, 6.7 million of whom have been jobless for more than six months.

However, the continued bleakness is not evidence that the stimulus package is not working (although most Americans don’t think it is). My colleagues Ajit Zacharias, Kijong Kim, and I  estimated that it would create at least 6.2 million jobs in the first three years. Looking at chart 2 from the employment situation report (pdf version only), ripped and seen below, it certainly looks like there’s a break in the data after March of 2009. The unemployment rate also starts to level off after a year of steady climbing. This isn’t proof, of course, since we don’t know what would have happened without the stimulus. However, I think this certainly puts the onus on those still saying the stimulus isn’t working to tell us what has caused the turnaround that happened just as the stimulus would have been taking effect.