NEW YORK — Americans are more confident they can get a job.
Since September, the labor force participation rate — a measure how many people are working or looking for work — has increased.
Even some people who gave up looking for jobs are restarting their searches.
There are valid reasons for job seekers to feel more optimistic: the unemployment rate is down to 4.9% and America added 2.6 million jobs last year, both really good signs.
However, participation is still very low. The participation rate hit its lowest point in September in nearly 40 years — one of Ted Cruz’s favorite jabs at the Obama economy.
Participation has been dropping since 2000. Part of the decline is natural: many from the Baby Boomer generation are retiring. But since the Great Recession, many younger people have also dropped out of the job market, discouraged that they can’t find work.
No one wants to see the unemployment rate fall merely because people abandon even trying to get a job. The recent pick up in participation suggests people are feeling better about finding a job and that America’s low unemployment rate isn’t a mirage.
Participation hit 62.9% in February, up from 62.4% in September. That’s a solid move up when you’re talking about a labor force of 158 million people.
“This is important because labor force activity had weakened so much since the Great Recession began…and had shown very little sign of recovery until late last year,” says Georgetown professor and Brookings Institution fellow Harry Holzer.
So who is coming back?
Gains have been across the board: black men, white men, white women, Latino men, Latino women. All are jumping back into the workforce.
The only red flag is that participation among black women is down a bit.
Now the question is whether the comeback is real. Many Baby Boomers still haven’t retired. When they do, participation in the workforce will likely fall further.
There are also 2.2 million people who had been unemployed for six months or longer. That’s way down from the highs of the recession but still well above the pre-recession mark of about 1.2 million people.
More people looking for work is a good thing, but the participation rate may not go back up much more any time soon.
“That pattern is unlikely to be sustained,” says Jim O’Sullivan, chief U.S. economist at High Frequency Economics, a research firm.