While Wall Street soars, job market still scarred
WASHINGTON — Don't let the soaring stock market and applause from politicians over a slight dip in the unemployment rate fool you.
A deeper dive into government data underscores just how bleak the picture still is in today's labor market.
The unemployment rate in April was 7.5 percent, 2 full percentage points below where it stood at the end of the Great Recession in June 2009. The Obama administration touts establishing of 6.8 million jobs in the past 38 months. At the same time, the stock market has roared back from recession depths, the Dow Jones index of industrial stocks this week closing above 15,000 for the first time.
On the face of it, this is good news.
The improving headlines mask a scarred labor market. One out of five American families reported last year that not a single family member had a job. About 102 million Americans are out of the work force. And by a number of measures, participation in the labor market remains at or near modern lows.
“Most of the improvement that we've seen in the unemployment rate hasn't been due to increased job opportunities. It's been due to people dropping out of, or never entering, the labor market because of weak opportunities,” said Heidi Shierholz, a labor economist for the Economic Policy Institute, a liberal think tank. “Most of that decline is not coming from what would really be considered meaningful improvement in the unemployment rate.”
There are several aberrations present in today's labor market.
For one thing, the fact that the unemployment rate has fallen 2 full percentage points since June 2009 omits the darker fact that it's a share of a work force of 155 million that's smaller than it was at the start of the recession. If people who have dropped out of the workforce were included, the jobless rate would be higher.
One explanation is that there are a smaller number of people in the job market, either employed or looking for work, when counted as a percentage of the total working-age population.
In recent decades, about 67 percent of the working-age population has been in the job market, the labor force participation rate.
In April, just 63.3 percent were in the job market. That's well below the 65.7 percent at the end of the recession in June 2009, and from the 66 percent in June 2007, more than a year before the U.S. financial crisis.
Even with the 528,000 additional workers in the labor force since June 2009, the actual percentage of Americans participating in the labor force in April contracted by 2.4 points.
The labor force participation rate was already weakening before the Great Recession. The 2000-2007 economic expansion that followed the prior recession was dubbed a jobless recovery, in part because of the lagging recovery of the labor force participation rate.
Another sign of deep labor-market troubles comes from the Employment-Population Ratio. It reflects the proportion of working-age adults who are actually employed, and for that reason it is considered a better gauge for measuring how successfully the economy provides jobs for working-age Americans.
In April, this ratio stood at 58.6 percent, vs. 59.5 percent in June 2009 and 63.1 percent in June 2007.
“That's not really much progress,” said Keith Hall, who was commissioner of the Bureau of Labor Statistics from 2008 to 2012.
In fact, during the recession of 1974-1975, this number bounced around slightly above 58 percent, pretty much where it is now. But that was before the full-blown entrance of women into the workforce in the 1980s, which pushed this ratio to well above 60 percent.
Looked at another way, 41.4 percent of 245.2 million working-age adults, or 101.6 million, weren't employed in April.
That's almost 102 million people who were in college, retired, independently wealthy or living off of family or friends.
On top of that, 20 percent of the 80.1 million U.S. families had no one working last year, according to Labor Department numbers released last month. That's up from the 17-18 percent of families with no one working between 2001-2008.
“There are 16 million families where nobody has a job,” said Hall, now a researcher at George Mason University's Mercatus Center in Virginia. “That just seems to me to be remarkable.”
In these measures, differences are usually measured in tenths of a percentage point, rather than several percentage points.
“When multiplied over a labor market with 155 million people in it, even a 1 percentage point move is a huge number of people who are not in the labor force,” said Shierholz of EPI.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- 153-year-old Venango well pumps out oil, history
- Small retailers at intersection of social networks, foot traffic
- Highmark and UPMC feud over canceled physician contracts
- Woman on dating site looks too good to be true: How to vet that pic
- Iron ore price decline hurts U.S. Steel’s cost advantage over rivals
- Test-tube tuna may be sea change
- In ‘StockCity,’ real investing like game
- Business Council for Peace program works to export profits, peace
- Pennsylvania unemployment rate drops to six-year low
- Health care, gas drilling industries await Gov.-elect Wolf’s footprint
- Variable-rate electricity contracts in Pennsylvania can cost customers plenty