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March 2006, Vol. 129, No. 3
Lower unemployment in 2005
Unemployment continued to decline and employment, as measured by the Current Population Survey (CPS), rose in 2005. The unemployment rate continued the downward trend that began in 2003, declining to 5.0 percent by the fourth quarter of 2005. The employment-population ratio increased during the year, while the labor force participation rate was essentially unchanged.1 Other labor market measures from the CPS also showed improvement during the year.
Major hurricanes Katrina, Rita, and Wilma struck the Gulf Coast area from late August through October of 2005. Hurricane Katrina, in particular, resulted in a large loss of life and widespread economic damage and disruption. At the national level, however, the effects of the hurricanes were not discernible in the major labor market indicators from the household survey. (For more information about the household survey, see box on page 14.) Special questions designed to measure the labor force status of Hurricane Katrina evacuees were added to the CPS beginning in October 2005; some early findings are discussed later in this article.
In 2005, unemployment levels and rates generally continued to decline. The unemployment rate for persons aged 16 years and older was 5.0 percent in the fourth quarter of 2005, 0.4 percentage point lower than a year earlier. Even though the unemployment rate declined through 2005 from its most recent peak in mid-2003, it remained above the jobless rate that preceded the 2001 downturn. (See chart 1.) The number of unemployed persons, at 7.5 million in the fourth quarter of 2005, was down by 563,000 from the same quarter in 2004 and by more than 1.5 million from its postrecession peak in the second quarter of 2003. (See table 1.)
For most major worker groups, the unemployment rate continued to edge down in 2005. The unemployment rate for adult men, at 4.3 percent in the last quarter of 2005, was 0.6 percentage point lower than a year earlier. The large decrease in the level of unemployment among adult men (414,000) accounted for most of the decline in total unemployment (563,000). The jobless rate for women edged down by 0.2 percentage point over the year to 4.5 percent in the fourth quarter of 2005. In 2004, the womens jobless rate fell by 0.4 percentage point. For teenagers (those aged 16 to 19), the jobless rate, at 16.1 percent in the fourth quarter, was little changed in 2005.
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1 The employment-population ratio is the proportion of the civilian noninstitutional population aged 16 years and older that is employed, and the labor force participation rate is the percent of the population that is in the labor force (the sum of the employed and unemployed). Although the CPS is a monthly survey, seasonally adjusted quarterly averages are analyzed throughout this article and over-the-year changes are based on comparisons of fourth-quarter data, unless otherwise noted.
Labor Force Statistics from the Current Population Survey
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