March 04, 2016
The Labor Department reported a sharp increase in the number of people entering the labor force in February and finding jobs, pushing the employment-to-population ratio (EPOP) to 59.8 percent, the highest rate in the recovery. This is 0.5 percentage points above the year-ago level, with all the increase coming since October. The recent rise in the EPOP suggests that many of the people who had left the labor force during the downturn are now coming back. However, the EPOP is still down by more than three full percentage points from the pre-recession level with most of the drop-off among prime age workers.
The establishment survey showed the economy creating 242,000 new jobs, with the gains broadly spread across sectors. Apparently the snow storms that hit the East Coast in early February did not markedly affect employment growth. Upward revisions to the prior two months data brought average growth over the last three months to 228,000.
Not all the news in the establishment survey was positive. The average workweek reportedly fell by 0.2 hours leading to a decline in the index of aggregate weekly hours, in spite of the increase in employment. The average hourly wage also reportedly fell by 3 cents in February. The reported decline is most likely a reporting error, but still the average hourly wage has only increased at a 2.0 percent annual rate comparing the last three months to the prior three months. There is certainly no case of accelerating wage growth in these data.