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Labor force increase is biggest since 2003 as many Americans finally get back to work

  • The labor force surged by 806,000, the biggest move since September 2003, and now sits just below 162 million.
  • Those counted outside the labor force declined by 653,00, though they still number 95 million.
  • The participation trend could be indicative that wages actually are coming up enough to encourage sidelined workers.

The U.S. economy did more than give jobs to 313,000 in February — it brought nearly three times that amount off the sidelines, where more than 95 million Americans still sit.

Inside the glittering nonfarm payrolls report the Bureau of Labor Statistics released Friday were some even more inspiring numbers. Skilled labor positions surged with big increases in construction and manufacturing, which has seen its best three-month period since 1984.

On a bigger-picture level, there was even more.

The labor force surged by 806,000, the biggest move since September 2003, and now sits just below 162 million. That's due to 653,000 people no longer counted as being out of the labor force and a growth of 785,000 folks reporting to be at work, according to the government's household survey. The labor force participation rate rose to 63 percent while the employment-to-population ratio rose to 60.4 percent, both the highest since September.

It was all part of a jobs market that continues to defy expectations. Every time economists or officials at the Federal Reserve pronounce the U.S. at "full employment," a report seems to come out indicating that there's still plenty of room for growth.

Contractors secure a wall section on a home under construction at the Toll Brothers Cantera at Gale Ranch housing development in San Ramon, Calif.
David Paul Morris | Bloomberg | Getty Images
Contractors secure a wall section on a home under construction at the Toll Brothers Cantera at Gale Ranch housing development in San Ramon, Calif.

"What companies have been trying to do over the six months is solving this Rubik's Cube, trying to figure out what we have to do to get those people off the bench to participate," said Bill Ravenscroft, senior vice president at Adecco Staffing. "If we continue this type of [payrolls] growth this is going to be the catalyst for a wage spike."

A jump in earnings was not a part of the February jobs report.

Coming a month after average hourly earnings leaped 2.9 percent higher, the 2.6 percent annualized increase came as a disappointment so some looking to see continued gains for worker paychecks. Fed officials for years have been waiting for more significant wage gains as they approve a gradual but slow pace of rate hikes.

Closer to the ground, though, many workers have been left out of the economic recovery as paychecks have been about flat compared with inflation. While that may be hard to change as more get back in the game, the participation trend could be indicative that wages actually are coming up enough to encourage sidelined workers.

"We're seeing employees moving around faster than before," Ravenscroft said. "Employers are going to see a lot of turnover in their workforce if they do not respond to those competitors in the marketplace that are raising their wages."

On Wall Street, the general trend of a tightening labor market, so long as it doesn't happen too quickly, was viewed as a positive.

"Companies are looking to hire. There are signs of some wage growth or inflation there, not anything that's to worry about at this point," said Tony Bedikian, head of global markets for Citizens Bank. "We should view that as a positive sign that there's confidence out there in the labor force."

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