Newsflash from the jobs front: it's happening. Americans are returning to the workforce. The U.S. labor force expanded by 555,000 people in February, according to a Friday report by the Bureau of Labor Statistics. Five Thirty Eight staffer Ben Casselman details what the number means to the U.S. economy. Casselman writes,
"It was the biggest one-month increase in more than a year and, more importantly, was the fifth straight increase, the longest such streak since the recession began more than eight years ago. The labor force participation rate — the share of the adult population that’s either working or actively looking for work — rose two-tenths of a percentage point to 62.9 percent, its highest level in over a year.
There is one downside to a growing labor force: If more people start looking for work there will be more competition for available jobs, holding down wages. Average hourly earnings fell by three cents in February, and the year-over-year rate of growth dropped to 2.2 percent, the slowest pace since last summer. Wages are volatile, and it would be a mistake to read too much into one month of disappointing numbers (earnings growth was strong in January), but the increase in labor participation suggests wage growth could remain muted.
Still, there’s no question that a growing labor force is good news on balance. In the short run, a larger pool of available workers means that job growth can continue without the economy overheating and driving up inflation. And over the long run, a higher participation rate should boost economic growth because more people are contributing to the economy."