Jobs Report: More Are Dropping Out Of Workforce

The Labor Department issued its monthly employment report on Friday and the news wasn't good. Payrolls did increase with 115,000 positions but that was less than the month before and far less than what most economists were expecting.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

ROBERT SIEGEL, HOST:

And I'm Robert Siegel. The government released its monthly employment report this morning, and the reaction was swift. President Obama highlighted the fact that private sector job growth continues.

PRESIDENT BARACK OBAMA: Our businesses have now created more than 4.2 million new jobs over the last 26 months.

SIEGEL: The total number of new jobs created in April was 115,000, far below expectations. We'll have more on how the campaigns are playing the jobs report. But first, here's NPR's Yuki Noguchi with details.

YUKI NOGUCHI, BYLINE: As of April, the unemployment rate declined to 8.1 percent - normally a good sign, but not when a lot of people are dropping out of the workforce. And last month, a whopping 342,000 people did. The percentage of adults in the labor force is now at a three-decade low. There's been more than a year and a half of continuous job growth. Despite that, the labor force is shrinking.

CHRISTINE OWENS: This is unusual.

NOGUCHI: Christine Owens is executive director of the National Employment Law Project, an advocacy group for low wage and unemployed workers.

OWENS: I think it does reflect some uncertainty about the state of the economy and lack of confidence that there will be good jobs out there for folks, and so they're making other choices instead of looking for work right now.

NOGUCHI: It's not clear where these people are going. Some may be retiring early, going back to school or working at home. Normally in recoveries, positive job growth has the opposite effect - people sidelined during a recession reenter the workforce. But Owens says that hasn't proven to be the case this time.

OWENS: It just seems like a pattern of declining labor force participation, as opposed to, you know, maybe one or two months where you see a drop, but then it goes back up and continues to climb.

NOGUCHI: Aparna Mathur is a resident scholar at the America Enterprise Institute. She says the stronger job growth in the earlier part of the year now appears to have been an aberration rather than an actual acceleration.

APARNA MATHUR: All of that was temporary, and now we're back to the same situation.

NOGUCHI: Mathur says for the past few years, hiring has followed a similar path. Holiday sales and other seasonal factors boost hiring during the winter, but that job growth doesn't stick. And by the spring, things begin to slow again. Partly, she says, that's because there's such an enormous pool of long-term, unemployed workers that the economy is still trying to absorb.

Last month, 41 percent of the 12-and-a-half million jobless people had been out of work for six months or longer.

MATHUR: You know, you've never seen numbers like that in any recession.

NOGUCHI: And that makes it much more difficult to achieve the escape velocity necessary to put a meaningful dent in the unemployment rate.

MATHUR: There's a lot of research saying that the longer you're out of the labor force, the less likely you are to be absorbed back in.

NOGUCHI: Mathur says there's another way the recent economic record has diverged from historical patterns: that is that GDP growth, though relatively low, has still been positive. Yet, that hasn't prompted the labor force to grow.

MATHUR: And I feel like, you know, firms are sort of anticipating more uncertainty in the future, less demand, and they're reacting to completely different signals.

NOGUCHI: The report prompted more concern that the economy is losing momentum. Investors pulled back. The major U.S. stock indices closed down between 1 and 2-and-a-quarter percent today. Yuki Noguchi, NPR News, Washington.

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