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Labor market recovery, are we there yet?

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Five years and going after the onset of the Great Recession, over ten million workers in the United States are unemployed. As of February 2014 the Bureau of Labor Statistics reports an unemployment rate of 6.7 percent, at least one and one half percentage points above a full employment rate.

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Behind the numbers is a heap of misery. In February alone, over 41 thousand additional workers became unemployed because of a lost job, or a job that ended. There were almost four million who have been unemployed for 27 weeks or more, many of these are without unemployment benefits.

This recovery has been a long slow grind from the depths of the beginning of the worst. In December of 2007 the unemployment rate was at 5.0 percent, a level that most economists would have labeled full employment. That vibrant economy is now only a distant memory.

That 2007 December would be the month that the National Bureau of Economic Research would date the beginning of an economic recession. A major financial crisis would ensue. The United States unemployment rate would rise steadily to a peak of 10.0 percent in October 2009.

It wouldn't get down to 7.0 percent until October 2013.

The jobs report for February provided an estimate that 175,000 net payroll jobs were added to the United States economy that month. A relatively good number, but not enough to prevent a tick up in the unemployment rate.

Why? Partly because labor force increased by 264 thousand in the same month.

The increase in the labor force is a positive sign, since enough potential workers were at least encouraged to look for work. It's just that enough of these new job seekers didn't find any. There were 105 thousand people entering the labor force in February without finding a job that month.

One of the concerns with the labor market numbers is the percentage of the adult population (defined traditionally as the population 16 years or older) that is in the labor force, either employed or unemployed looking for work. This labor force participation rate stood at 66 percent in December 2007. Since then it has declined, with occasional blips up. In February 2014 it stood at 63 percent. A closely related number to the labor force participation rate is the percentage of the adult population that is employed, or the employment population ratio. That number has also dropped since December 2007 (actually a decline began in the year 2000), from 62.7 to 58.8 percent in February 2014.

Economists are still debating what can be done about the drop in the employment - population ratio (the Grumpy Economist) and what has caused it; whether it be a labor market so far below full employment for so long to cause potential workers to not seek work because they have become discouraged at the prospects of finding any, or due to changing demographics like aging of the work force (The Conscience of a Liberal).

But no matter where you come down on that argument, the answer to the question are we there yet, has the labor market fully recovered is a resounding no.

For those of you who like graphs, see the accompanying slide show to see the story of labor market history since the beginning of the Great Recession in December 2007.