The US labor market continues to improve but at a slower pace than before

The official US unemployment rate fell from 8.4 percent in August to 7.9 percent in September following the addition of 661,000 jobs to the US economy. The realistic unemployment rate, which accounts for misclassification errors and workers who have left the labor force, fell slower than the official rate, reflecting declining labor force participation.

The full recall unemployment rate, the unemployment rate if the additional 3.8 million workers on temporary layoff since February immediately returned to work, increased from 6.6 percent in August to 7.3 percent in September—the highest it has been since April. The increase from previous months indicates that further labor market improvement will increasingly have to come from those experiencing permanent job loss instead of temporary layoffs, a group that will likely have more difficulty finding employment, posing a challenge for future labor market recovery. 

This PIIE Chart was adapted from Jason Furman and Wilson Powell III’s blog post, "Challenge facing US labor market worsened in September even as the headline numbers improved.”