BLOG: Massive Labor Force Increase Drives Jobs Numbers in PA

Yesterday, the Pennsylvania Department of Labor & Industry released the monthly jobs report for March 2016.

The department (and every labor department in every state) releases these every month in order to get a good understanding of how the state’s job market is doing, in comparison to past months and to the rest of the nation.

This month, the state’s unemployment rate was up — but we also saw increases in the labor force and total number of jobs. To many, this can be confusing — where does our state stand economically if the jobs report has good and bad numbers?

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You might be surprised to learn that an increase in Pennsylvania’s monthly unemployment rate is not necessarily a bad sign for the state’s economic picture. In fact, March’s three-tenths of a percentage point increase to 4.9 percent is a good example of an increase being a positive sign for Pennsylvania’s economy.

  • First, it’s important to understand our terminology: The unemployment rate is the number of unemployed people in the labor force, reported as a percentage.
  • The labor force is the sum of employed and unemployed persons, or, in other words, the number of people who are either working or actively looking for work.

The number of employed and unemployed is determined, in part, by a monthly statewide survey. This survey asks how many people ages 16 and older in a particular household are working and not working. The results reflect, respectively, the number of employed and unemployed. Together, they reflect the labor force.So when people enter the labor force, they generally enter – and respond to the monthly survey – as being unemployed because they are just getting back into the job market and are actively looking for work.

And this March, Pennsylvania saw a 30,000-person increase in the labor force in Pennsylvania. In fact, at 6,501,000 the labor force reached a record-high in March. Plus, the labor force grew by 83,000 over the past year – the largest over-the-year increase since 2008. The March increase in the labor force was due to an increase in employment and unemployment, with an indication that those looking for work are already finding it.

There are several scenarios when an increased unemployment rate is a not-so-good sign for the economy. If the unemployment rate increases in conjunction with a decrease in the labor force, that’s a potentially bad sign. Or, if the labor force stays the same, but employment declines and the number of unemployed increases, it’s the same issue: an unemployment rate increasing for the wrong reasons.

Fortunately, neither of these scenarios happened last month.

In Pennsylvania, our labor force has experienced consistent growth over the past 11 months. Combine that growth with a record-high jobs report in March, and you have a strong, growing economy where job seekers are confident they will find a job that pays in Pennsylvania.

More information on the jobs report can be found at workstats.dli.pa.gov.

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