From the Center on Budget and Policy Priorities:
Today is jobs day. And today’s jobs report, like most jobs report, will lead directly to the most uncomfortable question of the recovery: Has there even been an economic recovery?
Spend much time looking at the drop in the percentage of Americans participating in the labor force and you’re likely to think not. Unemployment has fallen 2.5 percent from its post-recession peak, but the share of working-age adults with jobs has barely budged. This leads to scary graphs, like this one, or scary stats, like this one: If labor-force participation had held at its pre-recession peak, unemployment would be around 9.7 percent today.
The implication of these numbers is that the recovery is a mirage. The official unemployment rate only counts people actively looking for work. It’s dropped less because people have found work than because they’ve stopped looking. Ergo, there’s been no recovery — just a hardening of the post-recession labor market.
This is a story I gestured at on Thursday. But Marc Goldwein of the Center for a Responsible Federal Budget pointed me towards an Urban Institute paper that complicates the situation considerably.
The popular (well, popular among depressed econ wonks) image of discouraged workers sighing and deleting their Monster.com account once and for all is wrong. The rate of labor force exit is actually lower than it was in the aftermath of the 2001 recession. It’s labor force entry that’s suffered.
In particular, it’s suffered among women — and it’s really suffered among young women – who are a lot less likely to enter the labor force than they were in 2002 and 2003.
That is, in certain ways, a more encouraging trend: Discouraged workers who leave the labor force typically see their skills erode. Young people who delay entry are often staying in school longer, gathering skills that will ultimately prove valuable to them (and student loan debt that will prove burdensome).
But that comforting possibility surely doesn’t explain all of the drop in entry we’re seeing among younger people. And it doesn’t really explain any of the drop in entry we’re seeing among older people.
There’s been a recovery. The growth numbers, and the payroll numbers, and the consumer confidence numbers, are all enough to tell us that. But not as much of a labor-market recovery as the unemployment rate indicates. A lot of people have been left behind, or perhaps more accurately, been discouraged from starting at all.
3 thoughts on “Recovery or not?”
Spending by the “government” is less than it was a year ago. (Deflationary) Productivity is up 1.1%. (All of that additional wealth has been captured by the 1%.) Workers wages are flat and have had no real growth for 10+ years. Consumer spending is up 4.6%. (Inflationary) What workers need is a much higher wage and many more jobs. But all we workers are getting from the Republicans is a call to “capitualte.”
The government controls inflation and manipulates metrics on employment. “Full employment”, “structural unemployment”, “frustrated workers” and the like are propaganda fixes. If we start to track labor participation rates, they will simply corrupt that index too.
I just HATE it when they call it ‘you stop looking for work’. That’s BS.
You don’t just stop needing to eat, pay for housing etc. Only those very fortunate to have relatives/friends/parents who can provide without strings will ‘stop looking for work’.
Those needing yet falling off the UI benefits platform because they simply cannot find work…well, they never start looking for work.
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