The Blog

Karen Lee, Employment Security Commissioner

03/04/10

How can jobs and the unemployment rate both go up at the same time?

On March 2, we announced that Washington added 12,400 jobs in January – the first jobs gains since November 2008. At the same time, the estimated unemployed rate inched up by one-tenth of a percentage point, to 9.3 percent.

On the surface, it seems illogical that the unemployment rate could increase at the same time jobs are increasing. But the answer lies in the definition of "labor force."

The labor force includes everyone who has a job and everyone who is unemployed and actively seeking work. If you're unemployed and want to work, but you are not actively seeking work (known as a “discouraged worker”), then you’re not counted as part of the labor force.

As the economy starts to improve and more jobs become available, discouraged workers will start looking for work again - thus increasing the total size of the work force. Since these individuals haven't found a job yet, it causes the unemployment rate to increase.

For several months now, our economists have been predicting this phenomenon would occur as the economy starts to pick up -- and it appears that it's starting to happen. As illogical as it seems, it's actually a positive sign that the economy is starting to move again.