The U.S. unemployment rate hit a 50-year low but both the labour force participation rate and employment to population ratio remain low

The U.S. unemployment rate hit 3.6% in April 2019, its lowest level since December 1969.

The unemployment rate is basically the difference between the labour force participation rate and the civilian employment to population ratio.

The labour force participation rate is close to a 40-year low,

 

The graph below shows the non-employment rate, which is quite different from the unemployment rate. It counts all those who are not part of the labour force, which comprises those who are either working or unemployed. The non-employment rate, which is thus the complement to the labour force participation rate, measures those who do not want to work. Principally, these are retirees, students, people with various handicaps, people who dropped out of the labour force, and people who do not want to work. This level is at a 40-year high and is playing its part in keeping the unemployment rate low.

 

And the Civilian employment to population ratio has yet to hit the level it reached before the financial crisis. The ratio captures key variables of labour market conditions, such as population growth and the percentage of the population that is working and thus participating in the labour force.

 

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