The employment rate for prime-age workers (ages 25-54) inched up to 78.3 percent in February, a new high for the recovery, as the economy added 235,000 jobs. This is 0.5 percentage points above its year-ago level. Most of the rise has been among women, with an increase in the prime-age employment-to-population ratio (EPOP) of 0.8 percentage points to 71.6 percent over the last year. The rise among men over this period has been just 0.2 percentage points.

This rise is noteworthy since it suggests that there are more workers being pulled into the labor force as the recovery continues, even as the unemployment rate has remained relatively stable. If this trend continues, it indicates that the labor market can continue to tighten without creating inflationary pressure.

Other data in the report are consistent with a labor market that still has considerable slack. While the number of people working part-time involuntarily fell by 136,000 in February, it is still well above pre-recession levels. (Voluntary part-time is well above pre-recession levels, presumably due to the ability of workers to get insurance outside of employment through the Affordable Care Act.)

The percentage of workers who are unemployed because they voluntarily quit their jobs fell for the third consecutive month. At 10.7 percent of the unemployed, this key measure of workers' confidence in their job prospects is closer to recession levels than full employment.

Wage growth also appears to be slowing somewhat. Year-over-year growth in the average hourly wage was 2.8 percent in February, but if we compare the average of the last three months (December-February) with the prior three months (September-November) the annualized rate of wage growth was just 2.5 percent. This does not support the view that wage growth is accelerating. It is also important to remember that employers are shifting compensation from health care to wages, so wage growth is likely exceeding the rate of growth of labor compensation.