Unemployment rate nears prerecession level by end of 2015

The U.S. labor market logged another year of recovery in 2015 as the national unemployment rate continued to trend downward and employment expanded. In the fourth quarter of the year, 7.9 million people were unemployed and the unemployment rate declined to 5.0 percent, about half its peak following the 2007–09 recession. Total employment, as measured by the Current Population Survey (CPS; see accompanying box), expanded by 2.1 million in 2015, reaching 149.5 million by year’s end. Employment growth, however, occurred at a slower pace than in 2014, when employment expanded by 3.1 million. The employment–population ratio was 59.4 percent in the fourth quarter of 2015, little changed from what it was the previous year. In 2015, the civilian labor force—the sum of the employed and the unemployed—rose to 157.4 million but the overall labor force participation rate declined to 62.5 percent.¹

This article reviews changes in major labor market indicators from the CPS in 2015. The article also examines changes in labor force status flows and usual weekly earnings, and summarizes the employment situations of veterans, people with a disability, and the foreign born. Data are seasonally adjusted unless otherwise noted.

Unemployment

View Chart Data

National unemployment declined by 1.0 million during the year, to 7.9 million in the fourth quarter of 2015. The decrease was about half that experienced the previous year. The unemployment rate declined by 0.7 percentage point over the year, to 5.0 percent in the fourth quarter of 2015. The rate reached a quarterly peak of 9.9 percent in the wake of the most recent recession and has been trending downward for the past 5 years. The rate at the start of the recent recession was 4.8 percent.² (See figure 1 and table 1.)

Both the number of unemployed people and the unemployment rate declined in 2015 for adult men, adult women, and teenagers (16 to 19 years of age). By the fourth quarter, the jobless rate for adult men had declined by 0.6 percentage point, to 4.7 percent, and the rate for adult women had declined by 0.7 percentage point, to 4.5 percent. The unemployment rate for teenagers decreased over the year by 1.9 percentage points, to 15.8 percent in the fourth quarter of 2015.

View Chart Data

Unemployment rates continued to decline for most of the major race and ethnicity groups in 2015. The jobless rate for Blacks dropped by 1.7 percentage points over the year, to 9.0 percent in the fourth quarter, but the rate for Blacks remained much higher than the rates for the other major race and ethnicity groups. Up until the second quarter of 2015, the jobless rate for Blacks had been at double-digit levels for about 7 consecutive years. (See figure 2.) The jobless rate for Whites declined by 0.5 percentage point over the year, to 4.4 percent, and the rate for Asians declined by 0.9 percentage point, to 3.8 percent. By comparison, the jobless rate for Hispanics, 6.4 percent in the fourth quarter of 2015, was little changed over the year.³

View Chart Data

In 2015, workers with less education continued to experience a higher unemployment rate than those with more education. The jobless rate for people 25 years and older with less than a high school diploma declined by 1.5 percentage points, to 6.9 percent, in 2015, and the rate for those with some college decreased by 0.6 percentage point, to 4.3 percent. The jobless rate for those with at least a bachelor’s degree declined over the year by 0.5 percentage point, to 2.5 percent in the fourth quarter—still 0.7 percentage point above the prerecession low of 1.8 percent in the fourth quarter of 2006. The rate for high school graduates, 5.4 percent, was essentially unchanged over the year. (See figure 3 and table 2.)

Only a few of the major occupation groups exhibited noteworthy declines in unemployment in 2015. This situation contrasts with that of the previous 2 years, when unemployment rates declined for all major occupation groups. The jobless rate for sales and office occupations declined over the year, to 4.6 percent. The rate for management, professional, and related occupations also continued to decline in 2015; this occupation group continued to have the lowest unemployment rate among the major occupation groups, 2.1 percent in the fourth quarter.⁴ The jobless rates were little changed over the year for natural resources, construction, and maintenance occupations (6.7 percent); service occupations (6.6 percent); and production, transportation, and material moving occupations (5.8 percent). (See table 3.)

View Chart Data

The proportion of the unemployed who had been jobless for 27 weeks or longer—a population also described as long-term unemployed­—declined in 2015, although it remained high by historical standards.⁵ In the fourth quarter of 2015, there were about 2.1 million individuals who were long-term unemployed—742,000 fewer than in 2014. The long-term unemployed had reached a quarterly peak of 6.3 million in the fourth quarter of 2010, accounting for almost half of the unemployed at that time. The long-term unemployed’s share of the total has been declining since then, and in the fourth quarter of 2015 they made up about one-fourth of the total unemployed, down 5.4 percentage points over the year. (See figure 4 and table 4.)

The number of people unemployed for a year or longer—1.4 million in the fourth quarter of 2015, not seasonally adjusted—continued to decline in 2015. These individuals made up 18.5 percent of the total unemployed in the fourth quarter of 2015.⁶ The number of people who were jobless for 99 weeks or longer (about 2 years)—671,000 in the fourth quarter of 2015, not seasonally adjusted—declined by 278,000 over the year. About 9 percent of unemployed people had been jobless for about 2 years or longer at the end of 2015; in contrast, the percentage prior to the most recent recession was about 3 percent.

The number of job losers, or those unemployed as a result of losing their jobs, also continued to decline in 2015. The number fell by 509,000, to 3.9 million by year’s end. Job losers are categorized into two groups: (1) people on temporary layoff who expect to be recalled to their jobs and (2) those not on temporary layoff. People in the latter group do not expect to be recalled; they are further categorized in the survey as either permanent job losers or people who have completed temporary jobs. In 2015, permanent job losers accounted for virtually all of the decline in the total number of job losers. (See table 4 and figure 5.)

View Chart Data

In the CPS, people who had previously worked but were not in the labor force prior to starting their current job search are classified as unemployed reentrants. There were 2.5 million unemployed reentrants in the fourth quarter of 2015, down by 310,000 over the year, the third year in a row this series showed a decline. The number of new entrants—that is, jobseekers who have never worked before—also declined in 2015 for the third consecutive year, this time by 183,000. The number of job leavers (unemployed people who voluntarily left their job), 804,000 in the fourth quarter, held fairly steady in 2015.

Labor force status flows

Labor force status flows measure the underlying movements between the monthly point-in-time numbers of people employed, unemployed, and not in the labor force. Each month, millions of people move between employment and unemployment while millions of others leave or enter the labor force.⁷ In 2015, 16.8 million people, or 6.7 percent of the population ages 16 and older, changed their labor force status in an average month; the 6.7-percent figure was the same as the percentage of the population that changed their labor force status in an average month prior to the last recession. The series peak was 7.5 percent of the population, in 2010.

View Chart Data

To get a better understanding of the unemployment level in 2015, one can examine flow data by the current employment status (employed, unemployed, or not in the labor force) of people who were unemployed in the previous month. Figure 6 shows the proportions of the unemployed who found employment, remained unemployed, or left the labor force over the month, all calculated as a 3-month moving average. The likelihood of an unemployed person becoming employed increased over the year, to 25.3 percent in December 2015; prior to the onset of the last recession, the rate was 26.9 percent. By the end of 2015, the rate of unemployed people becoming employed exceeded the rate of people leaving the labor force. The share of the unemployed leaving the labor force, 23.4 percent in December 2015, was close to its prerecession rate of 23.0 percent in November 2007. (See figure 6.)

In December 2015, the share of those who remained unemployed from one month to the next was 51.3 percent, down 1.0 percentage point over the year. The share of the unemployed remaining unemployed from one month to the next was close to its prerecession percentage of 50.1 percent in November 2007.

Employment

Employment grew at a slower pace in 2015 than in 2014. As measured by the CPS, the number of employed people grew by 2.1 million over the year, reaching 149.5 million in the fourth quarter of 2015. Unlike the pattern in 2014, overall employment growth was slightly more concentrated among adult women than adult men in 2015. The number of employed adult women rose by 1.1 million, to 67.8 million; the number of employed adult men rose by 975,000, to 76.9 million. The number of employed teenagers 16 to 19 years of age was 4.8 million at year’s end, virtually unchanged from a year earlier. (See table 1.)

Among the major race and ethnicity groups, Blacks saw their employment rise by 698,000 over the year, to 17.7 million by year’s end. The 698,000 figure accounted for about one-third of overall employment growth in 2015. This year was the second year in a row in which Blacks experienced a disproportionately large share of employment growth. The number of employed Whites increased by 823,000 during the year, to 118.1 million, and Asian employment rose by 358,000, to 8.7 million. At 24.6 million in the fourth quarter of 2015, Hispanic employment grew by 588,000 over the year; the figure posted was less than half their employment gain in 2014.

View Chart Data

In the CPS, the employment–population ratio represents the proportion of the civilian noninstitutional population that is employed. The employment–population ratio for all people ages 16 and older stood at 59.4 percent in the fourth quarter of 2015 and was little changed over the year (up 0.2 percentage point). The ratio had increased by 0.7 percentage point in 2014. (See figure 7.) The employment–population ratios for adult men (68.0 percent), adult women (55.6 percent), and teenagers (28.8 percent) showed little or no change over the year. (See table 1.)

Whereas employment–population ratios had increased for nearly all race and ethnicity groups in 2014, only Blacks saw a noteworthy increase in their employment–population ratio in 2015 (up 1.3 percentage points, to 56.1 percent). The increase reflected a strong growth in Black employment. In 2015, the employment–population ratio for Whites, 59.9 percent, was unchanged; the ratios for Asians, 60.3 percent, and Hispanics, 61.4 percent, showed little change over the year.

The number of workers holding more than one job edged up by 130,000 in 2015, to 7.5 million; the gain in the previous year was a more robust 555,000. In the fourth quarter of 2015, multiple jobholders accounted for 5.0 percent of the total employed, about the same as in 2014. The percentage of multiple jobholders in the labor force has ranged between 4.7 percent and 5.1 percent in the past 4 years. Before the recession, the rate was a slightly higher 5.3 percent.

The total number of self-employed workers, including both those whose businesses were incorporated and those whose businesses were not, edged down by 164,000 in 2015. In the fourth quarter, 15.0 million workers (not seasonally adjusted) were self-employed. The self-employment rate—the proportion of total employment made up of the self-employed—edged down from the previous year, to 10.0 percent in the fourth quarter of 2015. Of all self-employed people, about two-thirds had unincorporated businesses.

The number of people employed part time for economic reasons—that is, they wanted full-time work but could find only a part-time job or they had their hours reduced to part time—continued to decline in 2015, dropping by 942,000, to 6.0 million. Also referred to as those employed part time involuntarily, these individuals saw their numbers rise sharply during the 2007–09 recession (reaching a peak of 9.1 million in 2009); since then, however, their number has been trending downward.⁸ Still, even with the decline in 2015, the number of people employed part time for economic reasons remained relatively high by historical standards. Slack work or unfavorable business conditions, rather than an inability to find full-time work, remained the primary reason for involuntary part-time employment in 2015, accounting for more than half of all people employed part time for economic reasons. (See figure 8.)

View Chart Data

Employment rose substantially in just 1 out of 5 major occupation groups in 2015. Employment in management, professional, and related occupations grew by a total of 1.8 million, to 58.7 million, over the year, accounting for the bulk of the increase in overall CPS employment in 2015. Within this major occupation group, which accounts for nearly 40 percent of all workers, employment in management, business, and financial operations expanded by 1.1 million over the year and the number of workers in professional and related occupations grew by 709,000. Employment was little changed in the other four major occupation groups: service occupations; sales and office occupations; natural resources, construction, and maintenance occupations; and production, transportation, and material moving occupations. (See table 5.)

Labor force participation

The civilian labor force increased by 1.1 million, to 157.4 million, in 2015, and the labor force participation rate—the proportion of the civilian noninstitutional population 16 years and older that is in the labor force—declined by 0.3 percentage point, to 62.5 percent. The labor force participation rate has been trending downward and is generally projected to continue on that path for some time in the future.⁹ (See table 1 and figure 7.)

By the end of 2015, the labor force participation rate had declined for two major race and ethnicity groups: the participation rate for Whites had declined by 0.3 percentage point, to 62.6 percent, and the rate for Hispanics had declined by 0.7 percentage point, to 65.6 percent. The rate for Blacks, 61.6 percent, and the participation rate for Asians, at 62.7 percent, changed little in 2015.

People not in the labor force

People who are neither employed nor unemployed are considered “not in the labor force.” In the fourth quarter of 2015, the number of people not in the labor force increased by 1.7 million, to 94.4 million (not seasonally adjusted). All of the increase occurred among people who indicated in the survey that they did not want a job. On net, the number of people not in the labor force who indicated in the survey that they did want a job fell by 609,000, to 5.6 million, in 2015, after increasing by 503,000 in 2014.¹⁰ (See table 6.) The remaining share of people not in the labor force, 88.9 million (or 94.1 percent) in 2015, was made up of people who did not want a job.¹¹

Among people not in the labor force who currently want a job, the number defined as marginally attached to the labor force, 1.8 million in the fourth quarter of 2015 (not seasonally adjusted), fell by 365,000. This decline was more than 4 times larger than the previous year’s decline. These individuals wanted a job, had searched for work sometime in the previous year, and were available to work had a job been offered to them. Still, they are not counted as unemployed, because they had not actively searched for work in the 4 weeks preceding the survey. Among the marginally attached, individuals currently not looking for work specifically because they felt that no jobs were available for them are defined as “discouraged workers.” By the fourth quarter of 2015, the number of discouraged workers had declined by 95,000, to 641,000.

The remaining 1.2 million people who were marginally attached to the labor force in 2015 had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance, family responsibilities, health-related issues, and transportation problems. Those whose reason for nonparticipation was not identified in the survey also are included in the remaining 1.2 million people who are marginally attached. The number of these individuals declined by 270,000 in 2015.

Alternative measures of labor underutilization

BLS has defined several measures of labor underutilization. Known as U–1, U–2, and U–4 through U–6 (U–3 is the official unemployment rate), these metrics are used to gain insight into the degree to which labor resources are being underutilized, besides that obtained from U–3.¹² Like the official unemployment rate, the alternative measures are presented as a percentage of the labor force (adjusted as necessary). Alternative measures U–1 and U–2 are narrower than the official unemployment measure: U–1 denotes the number of individuals unemployed 15 weeks or longer as a percentage of the labor force, while U–2 designates job losers and people who completed temporary jobs as a percentage of the labor force. U–4 through U–6 are broader than the official unemployment measure: to the unemployed, U–4 adds discouraged workers; U–5 adds all people marginally attached to the labor force (including discouraged workers); and U–6 adds all people marginally attached to the labor force, plus people employed part time for economic reasons.

View Chart Data

In 2015, all six alternative measures of labor underutilization declined. U–1 declined to 2.1 percent and U–2 declined to 2.5 percent. U-3 declined to 5.0 percent.¹³ Among the remaining three measures, U–4 declined to 5.4 percent by the end of 2015 and U–5 to 6.1 percent. The broadest measure, U–6, declined by 1.5 percentage points, to 9.9 percent. (See figure 9.)

Earnings

View Chart Data

In 2015, median weekly earnings for men increased by 2.8 percent over the year, to $895, and women’s earnings increased by 1.0 percent, to $726.¹⁴ The increase in earnings for both men and women outpaced the change in the Consumer Price Index for all Urban Consumers (CPI-U), which was 0.1 percent from 2014 to 2015. (The data in this section are annual averages.) Women’s earnings averaged 81.1 percent of men’s earnings in 2015. This proportion has been in the 80-percent to 82-percent range since 2004. (See figure 10 and table 7.)

Asians and Whites continued to have higher median usual weekly earnings ($993 and $835, respectively) in 2015 than Blacks ($641) and Hispanics ($604). The difference in median weekly earnings between Blacks and Hispanics has narrowed in recent years, reflecting relatively strong growth in earnings of Hispanic workers. (See table 7.)

In 2015, among full-time workers ages 25 and older, those with higher levels of educational attainment continued to have higher median weekly earnings than those with less education. Workers with at least a bachelor’s degree reported median weekly earnings of $1,230, an increase of 3.1 percent over the previous year’s figure. Workers with some college or an associate’s degree had earnings that were little different from 2014 earnings ($762 per week). Earnings of workers with only a high school diploma rose 1.5 percent, to $678 per week, while workers without a high school diploma had median weekly earnings of $493, a 1.0-percent increase from 2014 earnings. (See table 7.)

Veterans

In the fourth quarter of 2015, the unemployment rate (not seasonally adjusted) for veterans was 4.1 percent, little changed from the rate a year earlier, while the rate for nonveterans declined to 4.7 percent. In the CPS, veterans are defined as men and women 18 years and older who previously served on active duty in the U.S. Armed Forces and who were civilians at the time the survey was conducted. Veterans are categorized as having served in the following periods of service:¹⁵ (1) Gulf War era II (September 2001 to the present), (2) Gulf War era I (August 1990 to August 2001), (3) World War II (December 1941 to December 1946), (4) Korean War (July 1950 to January 1955), (5) Vietnam era (August 1964 to April 1975), and (6) other service period (all other periods). (See table 8.)

The unemployment rate for male veterans was 4.1 percent in the fourth quarter of 2015, and the rate for female veterans was 4.3 percent. These rates were little different from those of the previous year. Among male Gulf War–era II veterans (those who had served since September 2001), the unemployment rate declined 1.6 percentage points in 2015, to 4.5 percent. The unemployment rate for female veterans from this era, 6.4 percent, was little changed.

Overall, 49.9 percent of male veterans were in the labor force in the fourth quarter of 2015, as opposed to 74.5 percent of their nonveteran counterparts. This disparity is due in large part to the age distribution of male veterans compared with that of male nonveterans: the percentage of male veterans in older age brackets is greater, and older individuals tend to have low labor force participation rates. In the fourth quarter, the participation rate for veterans of Gulf War II was 84.2 percent for men and 73.9 percent for women. Participation rates for both male and female veterans of Gulf War II rose from the rates posted a year earlier.

People with a disability

Over the year, there was little change in the employment situation for people with a disability. In the fourth quarter of 2015, the labor force participation rate for people with a disability edged down to 19.2 percent (not seasonally adjusted), and the rate for people without a disability edged down to 68.3 percent. (See table 9.) The lower participation rate among people with a disability reflects, in part, the fact that a large proportion of this group is 65 years and older, an age cohort with a low rate of labor force participation. Barriers to employment, limited assistance, and other labor-related issues also may contribute to low participation rates among people with a disability.¹⁶ In the fourth quarter of 2015, men and women ages 16 to 64 years with a disability were also much less likely to be in the labor force than their counterparts with no disability: for men in this age group, the labor force participation rate was 31.9 percent, compared with 81.9 percent for men without a disability; for women in the same age group, the participation rate at the end of 2015 was 28.2 percent for those with a disability and 70.4 percent for those without a disability.

The unemployment rate for people with a disability, 11.0 percent, was about unchanged over the year. The rate for people without a disability declined by 0.7 percentage point, to 4.6 percent, in 2015.

Foreign-born workers

In 2015, unemployment rates continued to decline for both foreign-born and native-born individuals. By the fourth quarter, the jobless rate for the foreign born was 4.5 percent (not seasonally adjusted), a decrease of 0.8 percentage point over the 2014 rate. The jobless rate for native-born workers was 4.9 percent, a decline of 0.6 percentage point. (See table 10.) Foreign-born workers are workers who reside in the United States but were born outside the country or one of its outlying areas (such as Puerto Rico or Guam) to parents, neither of whom was a U.S. citizen. The foreign born comprise legally admitted immigrants; refugees; temporary residents, such as students and temporary workers; and undocumented immigrants.

In the fourth quarter of 2015, foreign-born workers accounted for 16.9 percent of the U.S. civilian labor force. The labor force participation rate for the foreign born changed little over the year, while the rate for the native born edged down over the year. In the fourth quarter of 2015, foreign-born men continued to have higher participation rates (78.2 percent) than native-born men (66.8 percent), while native-born women were more likely to be in the labor force (57.3 percent) than women who were foreign born (53.8 percent).

Summary

CPS data indicate that the U.S. labor market continued to grow in 2015. Both the number of unemployed and the unemployment rate declined. The unemployment rate ended the year at 5.0 percent, down 0.7 percentage point over the year, but still slightly above the cyclical low that predated the 2007–09 recession. The proportion of unemployed people who had been jobless for long periods also continued to decline but remained well above prerecession levels. Employment, as measured by the CPS, expanded over the year, although growth was considerably slower than in 2014, and there still were a sizable number of people working part time even though they would have preferred full-time jobs. The employment–population ratio was little changed in 2015, while the labor force participation rate continued to trend downward. Of particular note, median weekly earnings of full-time wage and salary workers rose at a faster rate than inflation in 2015.