April 3, 2026
The unemployment rate fell 0.1% in March to 4.3% after having risen by 0.1% in February. The labor force declined by 396 thousand in March while employment fell by 64 thousand. As a result, the number of unemployed workers declined by 332 thousand and the unemployment rate fell 0.1% to 4.3%. The Fed considers full employment to be 4.2% so its current level of 4.3% is virtually identical to what the Fed would like.
The Fed has chosen to ease a couple of times late last year because it feared that the labor market would weaken significantly in the months ahead. As of now the labor market seems to be hanging in there.
After increasing by about 100 thousand per month in 2024, the labor force has been essentially unchanged since. Initially it declined as illegal foreign workers were deported, but it has rebounded in recent months as the pace of deportation has slowed. The slowdown in recent months is attributable to U.S.-born workers as younger workers seem to be staying in school a bit longer and some of the baby boomers are choosing to retire.
Payroll employment rose by 178 thousand in March versus the 64 thousand decline in civilian employment. How come the two estimates of employment are different? First, the two are figures are derived from separate data streams. The payroll number is calculated from employment numbers reported by a large number of employers across all industries. Employment for the unemployment rate calculation is derived from knocking on doors and asking people if they have a job. It is known as the household survey. It tends to be more volatile than the payroll employment data. One conceptual difference is that the household survey includes people who are self-employed which would not be captured in the establishment survey. In the end, there is always monthly noise between the two series. Over time the two surveys seem to show roughly comparable gains in employment.
While the official unemployment rate is the most widely used, the reality is that the official rate can be misleading because it does not include “underemployed” workers. There are two types of “underemployed” workers. First, there are people who have unsuccessfully sought employment for so long that they have given up looking for a job (discouraged workers). Second, are those workers that currently have a part time position but indicate that they would like full time employment. The total of these two types of underemployed workers are “marginally attached” to the labor force. The number of these workers has risen slightly in recent months to 1,944 thousand.
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To incorporate the impact of these marginally employed workers we should probably focus on a broader measure of unemployment which rose 0.1% in March to 8.0% after having declined 0.2% in February Full employment for this measure of unemployment is somewhere round the 8.0% mark.
Stephen Slifer
NumberNomics
Charleston, SC
Thank you for such a clear and thorough explanation of the unemployment rate in the US. I have some friends that are looking for their next job, and many are convinced that there are no jobs, but your data clearly shows that the US is running close to full employment. Staying motivated during what can be a discouraging process of looking for a new job involves a strategy of networking, tracking ACTIVITY, not merely job offers, as a measure of success, and understanding that most jobs are gotten through personal connections and networking, not anonymous job board postings.
Hi Kimberly. The unemployment rate overall is doing fine, but that does not mean that it is OK for everybody. The youth unemployment rate (16-24 years old) is typically about 8.0%. Today it is 10.5%. That is occurring at the same time that the overall unemployment rate has only edged upwards to 4.3%. The crowd just graduatin is taking the hit. As I see it, businesses are simply reluctant to hire because of the uncertain economic environment. They do not want to hire someone with no experience (i.e., right out of school). Rather than lay off people they are working their existing employees shorter hours. (If they lay them off they may not be able to get them back when the labor market picks back up). They are choosing to hire people part time rather than full time which means no health care benefits, no retirement. And some entry level positions have been replaced by AI. I have spoken to some CEO’s who require a manager who has a position to fill, to demonstrate why that position cannot be done by AI. The key to getting a job these days, as you point out, is networking. Keep finding ways to talk to others in your industry. If somebody offers you a position which does not pay as much as your previous job, take it. You can always try to get a more appropriate, higher paying position later. Have those job applicants learn something about the company with which they are interviewing. Have a couple of thought-provoking questions to ask. Do the same background check on the person who will be interviewing you (if you know). Demonstrate that you are curious and hard working. You have got to differentiate yourself from the pack somehow. That manager may well have 1,000 resumes in his inbox. The job market overall is not too bad, but for our youth that is probably not the case.