The participation rate of eligible workers has decreased by 3% in 10 years to 63% from 66%.  Source: 3/7/14 See chart 

On Friday, March  7th, the Bureau of Labor Statistics published its monthly payroll survey, a key report for investors and policy makers.  The tally of February jobs created came to 175,000, higher than economists expected given the recent trend of previous reports showing 129,000 job increases and a spate of severe weather.  Have we finally turned a corner from the job loss aftermath of the Great Recession? Have those 7.8 million jobs lost 2007-2010 returned? See the Congressional Research Service report for a detailed examination of all industries and employment statistics.

The payroll number is a slice of the overall picture 

I remain a skeptic that happy days have arrived and point to the small rise in the unemployment rate to 6.7%.  The BLS report posits that the increase from 6.6% to 6.7% is attributable to “discouraged workers” (who had fallen off the rolls of official jobless) re-entering the labor market.  This is a positive explanation supporting the availability of more jobs.  Commentary accompanying the latest report indicates however, that 3.8 million people are now considered long-term unemployed and that this 5% increase occurs while the job market is growing.

By my reckoning, enough anecdotal evidence points to a higher unemployment rate than statistics suggest.  Consider these issues:

  • How to count workers who no longer receive unemployment benefits and have therefore fallen off the rolls?
  • Stigma of job loss and stories of underemployment (think people with college and graduate degrees employed as seasonal workers at Macys*)
  • The drop in employee participation rate as shown in chart above is certainly evidence of continued hardship.
  • Household formation is 59% below its post WWII average and internal migration, an indication of a vibrant labor market is similarly depressed.

The media and investment professionals easily dismiss various categories of long-term job seekers, such as the 50-64 cohort, labeling them as early retirees, a lazy and inaccurate categorization.  On the other side of the labor spectrum there are Millennials who have become discouraged.

The Millennial Generation – not rebelling because many live with parents

Aged 18-33, the Millennial cohort is the “first in the modern era to have higher levels of student loan debt, poverty and unemployment, and lower levels of wealth and personal income that their two immediate predecessor generations (Gen Xers and Boomers) had at the same stage of their life cycles” according to Pew Research.  Because demographers point to the 18-33 age group as typically the most productive in terms of lifetime achievements and household formation, it is troubling to consider that these members are disproportionately stymied by lack of opportunities, whether they are “structural or cyclical”.

There are some positives 

The US economy is clearly on the mend and growing.  In terms of the Great Recession, the worst is over and the financial markets are doing quite well.  There are many things to celebrate.   Unfortunately for probably more than 6.7% of the workforce, this lagging indicator is still a real drag.  My hope is for a spring thaw.


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