Jobs -> Continued strength
Mar 4, 2022


Job gains in February surpassed expectations and were the largest monthly increase since last July. Gains in December and January were both revised up. There are now roughly 2 million fewer jobs now than before the pandemic as the recovery in the labor market continues steadily.

On a non-seasonally adjusted basis, the net number of payrolls added in February increased sharply after January’s seasonal lay-offs. On a seasonally adjusted basis, February job gains were above average based on longer-term history, and appear consistent with the steady trend of seasonally adjusted job gains in 2021.

The unemployment rate declined to 3.8%. The strength in the prime-age employment to population ratio is notable, while the rate of workers who are part time for economic reasons contrastingly rose. The recovery in labor force participation picking up is good to see.

Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22
NFP growth, k 517 424 677 647 588 481 678
UR, % 5.2 4.7 4.6 4.2 3.9 4 3.8
Prime-age UR, % 4.7 4.4 4.1 3.7 3.5 3.5 3.3
U6, % 8.8 8.5 8.2 7.7 7.3 7.1 7.2
LFPR, % 61.7 61.7 61.7 61.9 61.9 62.2 62.3
Prime-age LFPR, % 81.8 81.6 81.7 81.9 81.9 82 82.2
EPOP, % 58.5 58.8 58.9 59.3 59.5 59.7 59.9
Prime-age EPOP, % 78 78.1 78.3 78.8 79 79.1 79.5
PTER, % of payrolls 2.9 2.9 2.9 2.7 2.5 2.4 2.6
Long-term UR, % 1.9 1.6 1.4 1.4 1.2 1 1
AHE, % m/m 0.3 0.5 0.6 0.4 0.5 0.6 0
AHE, % y/y 4.3 4.8 5.4 5.3 4.9 5.5 5.1
Source: BLS, @benbakkum.


Transportation and warehousing as well as professional service jobs continue to stand out as industries where employment is growing at a strong pace, even though they’re already well above pre-pandemic levels of employment. Retail jobs have essentially recovered to pre-pandemic levels.

The chart below shows the strong pace of this recovery relative to other recessions. It’s striking how much of straight line the recovery has maintained over the last year.

If the average job growth of the last three months continues at the same pace, the total number of jobs would fully recover to where it would have likely ended up had the pandemic not occurred around the middle of 2023. In many ways that would be an even tighter labor market than before the pandemic as the population has aged and a large number of workers have retired in the intervening period.

An aggregate measure of labor market conditions, the Blanchflower-Levin employment gap, shows that there is essentially no more slack left in the labor market. It’s important to note however, that the participation gap shown here is based on the overall participation rate. The prime-age participation rate clearly appears to still have room to improve.

Note: the unemployment gap is the difference between the unemployment rate and the non-accelerating inflation rate of unemployment (NAIRU). The participation gap is the difference between the labor force participation rate (LFPR) and the CBO’s estimate of the potential LFPR. The underemployment gap is the difference between the number of employees working part-time for economic reasons as a percentage of the labor force, adjusted for the difference in the average number of hours worked by part-time and full-time employees, and the 1994-2007 average of this calculation.