Decline in Labor Force Leads to Drop in Unemployment

Friday 02 July 2010
by: Dean Baker | Center for Economic and Policy Research | Report

The June drop in hours suggests that hiring will slow further.

The Labor Department reported that 652,000 people left the labor force in June, causing the unemployment rate to edge down to 9.5 percent, even as the number of employed reportedly dropped by 301,000. The establishment survey showed a gain of 100,000 jobs, excluding the 225,000 Census workers who lost their jobs in June. The establishment survey also showed declines in both the length of the average workweek and the average hourly wage, providing further concerns about labor market weakness going forward.

The employment-to-population (EPOP) ratio fell to 58.5 percent, reversing gains from the prior three months; although this is still 0.3 percentage points above the low hit in December. This decline was concentrated among men who saw their EPOP fall by 0.3 percentage points, as their unemployment rate edged up from 9.8 to 9.9 percent. The EPOP for women was unchanged, with their unemployment rate falling from 8.1 percent to 7.8 percent.