Table 3 National Employment Indicators (Third Quarter) 2022 Third Quarter
2021 Third Quarter
Unemployment Rate
3.5
4.7
Labor Force Participation Rate Employment-Population Ratio
62.3 60.1
61.7 58.8
Description: • Unemployment Rate: The number of unemployed as a percentage of the labor force. • Labor Force Participation Rate: The percentage of the population that is either working or actively looking for work. • Employment-Population Ratio: The share of the total population that are employed. Analysis: • Compared with Q3 2021, the unemployment rate was substantially lower at 3.5 % matching the pre-pandemic unemployment rate in February 2020. September 2022 and February 2020 were the lowest monthly unemployment rates since July 1969! The concern with a tight labor market is that employers will need to compete for workers by raising wages, possibly fueling a wage-price spiral that leads to higher rates of inflation. • The Labor Force Participation Rate (LFPR) includes those people who are working or are unemployed but are actively looking for work. It is an important gauge of the society’s overall labor market capacity. The LFPR changes as people enter and leave the labor force over time. In February 2020 before the pandemic, the LFPR was 63.4%. Covid-19 caused a steep and swift decline to 60.2% in April 2020. After April, the LFPR initially rose quickly but has been increasing only slowly since August 2020. For 2022 Q3, the LFPR stood at 62.3%, still below the February 2020 mark. Covid-19’s long haul effects, retirements by baby boomers, and Covid related child-care issues are the likely culprits for lower labor force participation rate. • The Employment – Population (EP) Ratio differs from LFPR in that it doesn’t include those who are unemployed and are actively looking for work. The EP ratio is an important indicator of ability of existing labor resources to support economic growth. Real GDP growth depends upon the size of the civilian population, the percentage of the population employed, and labor productivity. Holding all else constant, the greater the employment-population ratio, the greater potential for real GDP growth. Like LFPR, the EP ratio declined sharply with the advent of the pandemic, falling to 51.3% in May 2020. It has rebounded sharply since and stood at 60.1% in September 2022 but is still below the pre-pandemic February 2020 ratio of 62.3%.
Central Wisconsin Report - Fall 2022
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