Although the headline numbers on last week’s job report were below expectations and tariffs may create further drag, the labor market remains quite strong. One of the metrics that I have been watching has been the continued decline in unemployment rates among groups with historically higher unemployment. While all jobs and compensation are not equal, low unemployment rates are an encouraging sign.
One way to look at the breadth of the labor market’s health is to look at unemployment rates by education level (see below). As the bottom panel shows, the difference in unemployment rates between those with a bachelor degree and those with a high school diploma is historically low.
Similarly, we can slice the data to view unemployment rates by race. Currently, the gap between black and white unemployment rates is also historically low.
Another metric worth following is the U6 unemployment rate, which includes the official headline U3 unemployment rate plus those who are underemployed (discouraged workers or those marginally attached to the labor force, as well those working part-time for economic reasons).
While low unemployment benefits workers today, it also provides valuable training and experience that will benefit those workers, their future employers, and the overall economy for years to come and beyond the current cycle.
