The Employment Paradox

Friday we got good news and bad news about the unemployment situation. The numbers for April came in, and the U.S. economy added 290,000 jobs, which is the most for any month since March 2006. And that doesn't count any newly hired census workers. At the same time, the unemployment rate rose, from 9.7 percent to 9.9 percent.

How did this happen? The biggest change for the month was the massive increase in the size of the labor force. According to the Bureau of Labor Statistics, an additional 805,000 people entered the labor force in April; a big part of that was 195,000 people re-entering the job market. These are people who were thrown out of work some time ago and had given up on finding a job, but had been encouraged enough by the recovery to officially join the labor force again.

That's one of the paradoxes of the growing economy: It causes the labor force to grow at a pretty rapid rate, meaning job growth has to be unusually strong just to keep pace. As to which number is more important - the number of new jobs created or the unemployment rate - it matters which side of the fence you're on. The job creation is a sign of a healthy economy, but if you're still looking for a job, you probably don't need the competition that's reflected in the unemployment rate.