Classifieds | Archives | Jobs | About TGT | Contact | Subscribe
 | 
Last updated 4 minutes ago
Printer Friendly Version | TGT@Twitter | RSS Feed |
HOME LOCAL MIDEAST ASIA WORLD BUSINESS SPORT OPINION WRITERS
Robert Higgs: Looking beyond the unemployment numbers
January 15, 2014
 Print    Send to Friend

The US unemployment rate dipped to 6.7 per cent in December, stirring considerable joy in Mudville. Before we spend time shouting hurrah, however, we should bear in mind a few other facts and recall that not so long ago an unemployment rate of 6.7 per cent would have been considered scandalous. One of the main reasons for containing our joy is that the rate fell from 7 per cent in November despite the addition of just 74,000 net new jobs, a weak performance by any measure – and far below the 2013 monthly average of 182,000 new jobs. Another reason for caution is that the standard unemployment measure (U-3) provides a distorted picture of what’s taking place in the job market.

A better measure of the health of the job market is total employment: how many people have jobs. After all, it is employment that contributes to our well-being. Jobs, not unemployment, produce the goods, services and earnings that our families rely on. And on this front the picture is grim by historical standards, with 2 million fewer civilians working at the end of 2013 than at the end of 2007, when the economy began to tank.

But even this doesn’t tell the full story, because while the economy and job market have been struggling, the population has been growing. This means that a smaller percentage of the job-eligible civilian population – that is, non-institutionalised individuals age 16 and older – has jobs. The employment-population ratio plummeted, of course, during the recession. While the economy has slowly inched its way back since hitting bottom in mid 2009, the ratio of employment to population has been stuck in the 58 per cent to 59 per cent range ever since – anemic by historical standards. In December, the employment-population ratio remained stuck at 58.6 per cent.

What these numbers tell us is that the labour market remains in a funk. The latest Bureau of Labour Statistics jobs report clearly shows that employment continues its recovery. Over the course of 2013, the number of unemployed fell by 1.9 million. And since the low point during the recession, more than 7 million jobs have been added. But in terms of total jobs, we’re still in the hole.

The collapse of the employment-population ratio is particularly troubling, indicating that something must have occurred since 2008 or 2009 to depress the job market. In December, for example, 2.4 million people were classified as “marginally attached” to the labour force. These individuals wanted and were available for work, had looked for work sometime in the past year, but hadn’t searched for a job in the four weeks prior to the BLS survey. As a result, they were not counted as unemployed, though unemployed they certainly are.

While there are many reasons for the sub-par performance, the many (and ongoing) uncertainties related to the future costs of ObamaCare, the Dodd-Frank financial reform act, and other pending regulations and taxes loom large among them. It seems clear from the evidence that these policies have discouraged hiring.

For many decades the US population and the US labour force grew in tandem. That is no longer the case. Whatever the reason, one thing is clear: unless the labour force resumes something like its historically normal growth, we cannot expect the economy to resume its historically normal growth.

MCT

Add this page to your favorite Social Bookmarking websites
Comments
 
Post a comment
 
Name:
Country:
City:
Email:
Comment:
 
    
    
Related Stories
Peniel E. Joseph: Fixing justice in America
Walter Scott, a 50-year-old black man killed by a South Carolina police officer during a chase that millions of people have now viewed on video, is the latest victim of a..
Ronald J. Krotoszynski Jr.: Courts would never let Selma marches go ahead today
To mark the 50th anniversary of the Selma marches of 1965, we will replay the inspirational words of the Rev. Martin Luther King Jr., recount the courage of the marchers ..
William H. Frey: America’s demographic destiny
A just-released Census Bureau report shows that by 2044, whites will no longer comprise a racial majority in the United States. By then, the nation — like today’s Los Ang..
Craig Lally: Shooting of LA homeless man underscores risks police face
The death of a homeless man in downtown LA’s skid row on Sunday has received wide coverage, both in the city and around the world. This comes at a time of heightened ..
Michael Jansen: Deepening the divide
The shooting in the US last week of three young Muslim Arabs has deepened the disconnect between the US/West and many in the Arab world. While the Chapel Hill, North Caro..
 
FRONTPAGE
 
GALLERY
 
PANORAMA
 
TIME OUT
 
SPORT
 
 
Advertise | Copyright