The unemployment rate moved downward another notch in April, to 8.1 percent, the Labor Department reported Friday, but the drop was hardly the good news it seemed to be.
The unemployment figure, which reflects the percentage of people looking for work, fell largely because people gave up trying to find jobs. People who quit seeking work are no longer counted as unemployed.
The labor participation rate is shrinking.
“The improvement in the unemployment rate we saw in April was entirely due to people dropping out of — or not entering — the labor force because of weak job prospects,” said Heidi Shierholz, a labor economist at the Economic Policy Institute.
Overall, the Friday jobs report added to concern that the economic recovery may be slowing.
The figures on job creation come a week after the Commerce Department reported that during the first three months of 2012, economic growth had slowed to an annual rate of 2.2 percent, after reaching 3 percent growth at the end of 2011.
The economy added 115,000 payroll jobs last month, a meager showing compared with earlier this year, when the jobs tally was rising at twice that rate and was sowing optimism about the nation’s economic prospects.
The ranks of the unemployed fell by 173,000 in April as workers gave up their job search. The labor force, defined as the number of people working or seeking work, fell by 342,000 in April, the Labor Department said.
The jobs figures are “generally telling you that discouragement is rising,” said Steven Ricchiuto, chief economist at Mizuho Securities.
Other economists say that while discouragement is a factor in the shrinking labor force, so is the aging of the baby-boom generation.
Since 2000, the percentage of Americans working or seeking work — the labor force participation rate — has been steadily declining as baby boomers have begun retiring. Because of this, the Federal Reserve Bank of Chicago expects the labor force participation rate to be lower in 2020 than it is today, regardless of how well the economy does.
In a March report titled “Dispelling an Urban Legend,” Dean Maki, an economist at Barclays Capital, found that demographics accounted for a majority of the drop in the participation rate since 2002.
To put that in perspective, economists project that if the same percentage of adults were in the workforce today as when Barack Obama took office, the unemployment rate would be 11.1 percent. If the percentage was where it was when George W. Bush took office, the unemployment rate would be 13.1 percent.
The unemployment numbers, which may be the economic statistic bandied about the most in a presidential contest, were seized upon by presumptive Republican presidential nominee Mitt Romney, who called Friday’s report “terrible and very disappointing.”
Romney suggested that job growth in a recovery should be closer to 500,000 jobs a month.
“This is way, way, way off from what should happen in a normal recovery,” he said on Fox News. “It’s a terrible and very disappointing report this morning. . . . We seem to be slowing down, not speeding up. This is not progress.”
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