April’s jobs: Americans aren’t working
By Felix Salmon
May 4, 2012
The big news, however, lies elsewhere, in the fact that a whopping 522,000 people joined the “not in labor force” rolls last month. When more than half a million people in one month decide that they’re not even going to bother looking for work any more, there’s no way you can say you’re in a healthy recovery.
First you have the number of people not in the labor force, which has been climbing steadily through the recession and the recovery, and is now approaching 90 million. The only time it fell was during the first quarter of 2010 — the census-hiring boom. This chart speaks volumes to me: it says that while Capital might not be in a recession any more, Labor still isn’t working.
Then there’s the even scarier one, which is the labor force participation rate — now down to 63.6%.
This chart is just petrifying. The participation rate started falling after the dot-com bust, leveled off during the credit boom (but never really rose much), and then fell off a cliff when the recession started. You’d think it would have started to bounce back up by now, but no. Instead, we’re now deep into pretty much unprecedented territory. Yes, the participation rate has been this low before — back in 1981. But that was during the decades when women were were just starting to move into the labor force.
A key indicator of labor recession is still in force: if you’re unemployed, you’re still more likely to drop out of the labor force entirely than you are to find a job. In a country of 314 million people, there are only 115 million full-time workers and 27 million part-time workers. It’s really hard to get a robust recovery when the number of people earning money is so anemic.
For demographic reasons — the retirement of the baby boomers — the labor force participation rate is naturally going to fall over the next decade. But go back just one year, to March 2011, and look at the official CBO projectionof the labor force participation rate. The Congressional Budget Office saw a rate of 64.6% in 2012 — a full percentage point higher than we’re at right now. The participation rate wasn’t expected to fall to today’s level of 63.6% until 2017.
Politically speaking, the unemployment rate is still the number that people concentrate on. But increasingly, being unemployed is little more than a halfway house between employment and dropping out of the labor force altogether. Until the labor force participation rate stops falling and starts rising, the so-called recovery will remain a theoretical economic entity and not a real-world reality for millions of Americans. We need jobs, and we need them now.
Update: The labor force actually fell by 342,000, not 522,000. The working-age population grew by 180,000, however, so the number of people not in the labor force went up by 522,000.
( This last figure is really telling, because of the 115,000 new jobs created last month, even if they ALL went to young college grads, that would still leave 65,000 grads per month without a job. When you add to that the number of immigrants, estimated at around 1,500,000. a year to this figure that means that our economy needs to create around 280,000 jobs each month just to keep pace with the population. So we are still losing ground on the jobs. front. The interesting thing is that this article appeared on Reuters, which is heavily invested in the Obama administration. Maybe they are actually going to have to start reporting more balanced news about this administration. The TV ratings came out two days ago and CNN is steadily losing market share while Fox is steadily gaining market share. Maybe the other networks are seeing the writing on the wall, "start reporting the news accurately or gradually go out of business".
First you have the number of people not in the labor force, which has been climbing steadily through the recession and the recovery, and is now approaching 90 million. The only time it fell was during the first quarter of 2010 — the census-hiring boom. This chart speaks volumes to me: it says that while Capital might not be in a recession any more, Labor still isn’t working.
Then there’s the even scarier one, which is the labor force participation rate — now down to 63.6%.
This chart is just petrifying. The participation rate started falling after the dot-com bust, leveled off during the credit boom (but never really rose much), and then fell off a cliff when the recession started. You’d think it would have started to bounce back up by now, but no. Instead, we’re now deep into pretty much unprecedented territory. Yes, the participation rate has been this low before — back in 1981. But that was during the decades when women were were just starting to move into the labor force.
A key indicator of labor recession is still in force: if you’re unemployed, you’re still more likely to drop out of the labor force entirely than you are to find a job. In a country of 314 million people, there are only 115 million full-time workers and 27 million part-time workers. It’s really hard to get a robust recovery when the number of people earning money is so anemic.
For demographic reasons — the retirement of the baby boomers — the labor force participation rate is naturally going to fall over the next decade. But go back just one year, to March 2011, and look at the official CBO projectionof the labor force participation rate. The Congressional Budget Office saw a rate of 64.6% in 2012 — a full percentage point higher than we’re at right now. The participation rate wasn’t expected to fall to today’s level of 63.6% until 2017.
Politically speaking, the unemployment rate is still the number that people concentrate on. But increasingly, being unemployed is little more than a halfway house between employment and dropping out of the labor force altogether. Until the labor force participation rate stops falling and starts rising, the so-called recovery will remain a theoretical economic entity and not a real-world reality for millions of Americans. We need jobs, and we need them now.
Update: The labor force actually fell by 342,000, not 522,000. The working-age population grew by 180,000, however, so the number of people not in the labor force went up by 522,000.
( This last figure is really telling, because of the 115,000 new jobs created last month, even if they ALL went to young college grads, that would still leave 65,000 grads per month without a job. When you add to that the number of immigrants, estimated at around 1,500,000. a year to this figure that means that our economy needs to create around 280,000 jobs each month just to keep pace with the population. So we are still losing ground on the jobs. front. The interesting thing is that this article appeared on Reuters, which is heavily invested in the Obama administration. Maybe they are actually going to have to start reporting more balanced news about this administration. The TV ratings came out two days ago and CNN is steadily losing market share while Fox is steadily gaining market share. Maybe the other networks are seeing the writing on the wall, "start reporting the news accurately or gradually go out of business".
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