by Calculated Risk on 5/06/2011 10:19:00 AM

A common question is why the unemployment rate increased to 9.0% even though 244 thousand payroll jobs were added? This is because the data comes from two separate surveys. The establishment survey showed a gain of 244,000 payroll jobs in April, but the household survey showed a loss of 190,000 jobs.

The number to use for jobs is the establishment survey, but the unemployment rate is based on the household survey. The two surveys can diverge over the short period, but over time it will all work out.

Here are a few more graphs based on the employment report ...

Percent Job Losses During Recessions

Click on graph for larger image in graph gallery.

This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at the start of the recession.

In the previous post, the graph showed the job losses aligned at maximum job losses.

In terms of lost payroll jobs, the 2007 recession is by far the worst since WWII.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was little changed over the month, at 8.6 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of workers only able to find part time jobs (or have had their hours cut for economic reasons) increased to 8.6 million in April from 8.43 million in March.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 15.9% in April from 15.7% in March. This is very high.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 5.839 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 6.122 million in March. This remains very high, and is one of the defining features of this employment recession.

Summary

This was another mixed report.

So far the economy has added 854,000 private sector jobs this year, or 213,500 per month. There have been 768,000 total non-farm jobs added this year or 192,000 per month.

This is a much better pace of payroll job creation than last year, but the economy still has 6.955 million fewer payroll jobs than at the beginning of the 2007 recession. At this pace, it will take 3 years just to get back to the pre-recession level, or sometime in 2014! Considering the depth of the recession, this remains a sluggish jobs recovery (not unexpected following a financial crisis).

This pace of job growth is just more than enough to keep up with the growth in the labor force, so it will only push down the unemployment rate slowly. The unemployment rate has declined from 9.4% in December 2010 to 9.0% in April.

The increase in the unemployment rate from 8.8% to 9.0% in April, was bad news, especially since the participation rate was unchanged at 64.2%. Note: This is the percentage of the working age population in the labor force. I expect the participation rate to move a little higher as the job market improves, and that will keep the unemployment rate elevated all year.

The increase in the the number of part time workers for economic reasons, and the increase in U-6 to 15.9% were more bad news. There are a total of 13.75 million Americans unemployed.

The average workweek was unchanged at 34.3 hours, and average hourly earnings increased slightly.

Overall this was another small step in the right direction for payroll jobs, but this report reminds us that unemployment and underemployment are critical problems in the U.S.

• Earlier Employment post: April Employment Report: 244,000 Jobs, 9.0% Unemployment Rate