The unemployment numbers just released are good–they are not great because of some of the underlying factors. Investor’s Business Daily reported that in April the unemployment rate dropped to 3.9 percent. That is good news, but there are some other numbers that are cause for concern.
The article at Investor’s Business Daily reports:
Since Trump took office, the economy has added a total of 2.7 million jobs, and since his tax cuts took effect we’ve seen an average 200,000 new jobs each month. Initial jobless claims are at decades long lows as well.
That’s unquestionably good news.
The report also finds, however, that wages rose slightly less than expected in April — with hourly earnings climbing at a 2.6% annualized rate.
…According to the Census household survey, the biggest contribution to the drop in the unemployment rate wasn’t people getting jobs — that survey registered a gain of just 3,000 in April. It’s due mainly to the fact that 410,000 dropped out of the labor force — and no longer count as unemployed.
The article cites some figures explaining changes in the Workforce Participation Rate in various age groups:
The labor force participation rate in Dec. 2000 was 67%. Today it is just 62.8%.
The employment-to-population ratio then was 64.4%. Now it’s 60.3%.
The population not in the labor force — they don’t have jobs and aren’t looking — has climbed a stunning 25.3 million over those years.
Think about it this way. If the labor force participation rate were the same today as it was in December 2000, the unemployment rate wouldn’t be 3.9%. It would be 10%!
Yes, many who’ve left the labor force over the past 18 years are baby boomers entering retirement. But that doesn’t come close to explaining the massive increase in labor dropouts.
For example, the labor force participation rate among 20- to 24-year-olds was 78% in December 2000. It’s just 71% today. For those 25-34 years old, the rate declined from 85% to 83%.
In contrast, among those 55 and older, the participation rate increased — going from 33% in December 2000 to 40% now.
From my perspective, there are a number of reasons for this change–the federal government has made not working too comfortable. Our safety net has gotten too comfortable for many people, creating multi-generational welfare recipients. We did go through a recession after the housing bubble burst, but we are coming out of that now, and it is time for people to resume their job searches. Another reason for the fact that the workforce participation rate is so low might be that we are graduating students from college with no marketable skills or with the idea that since they just graduated, they can start their careers at the top of the corporate ladder. Some of these graduates refuse to look for jobs outside of their chosen degree field or refuse to begin any place other than at the top. There is also the matter of whatever work ethic students may or may not have learned in college.
The economy is looking better, but we have a long way to go before we can be considered actually prosperous–we need to deal with the debt and we need to shrink government drastically.