While the sudden slowdown in jobs growth after many months of strong numbers is worrying and signals a weakening economy, a more long-term concern is the persistently low labor force participation rate that has not recovered in the decade since the onset of the Great Recession.
I’ve been studying labor market issues for over much of my 30 year career as an economist. Let me explain why you should be paying more attention to the participation rate.
Strong employment growth is important because getting a job is one of the best ways to improve a person’s economic standing. For this reason, slowing employment growth and rising unemployment are worrisome.
But while the unemployment rate is currently near a 50-year low of 3.6%, that statistic doesn’t tell the full story and can mask a deterioration in the labor market.
The participation rate measures all active workers divided by the working-age population. More importantly, it reflects people’s attachment to the job market – including their economic engagement and also, because a job is such an important part of a person’s identity, their overall well-being.
When people who are unemployed grow too discouraged and stop looking for work, it causes the participation rate to go down. But as a result, the unemployment rate goes down as well because it doesn’t include people who have given up. This makes the picture look better than it is.
From about the late 1980s until 2008, the participation rate fluctuated around 66% to 67%. But after the Great Recession, the rate dropped more 3 percentage points over the next seven years and has barely budged since. The latest jobs report shows it’s at 62.8%.
The 3 percentage points decline in participation translates to over 6 million people no longer in the labor force.
Trends in men and women
What’s driving the decline?
Men’s labor force participation has actually been falling for almost six decades. One possible reason for this is the decline in low-skilled jobs, a decline that was quite sharp during the worst periods of the Great Recession. Even with the improvement of labor market conditions since the depths of the recession, the participation rate has not recovered.
Women’s labor force participation has also been declining, although this is a somewhat more recent phenomenon. It had been rising since at least World War II from around 30% to a peak of around 60% in 1990, when the United States had the sixth-highest labor force participation rate of women among the 22 most advanced economies in that year. But around the time of the recession, it began to drop, and by 2010 the U.S. fell to 17th place.
Possible reasons include the relative lack of parental leave and child-care policies compared with these other economies, as well as the greater opportunity for part-time work.
There are appropriate concerns about the cyclical headwinds facing the U.S. economy, and the May jobs report does little to offset those worries. But policymakers and all Americans should also be concerned about persistent longer-run trends, like the continuing low rate of labor force participation.
[ Like what you’ve read? Want more? Sign up for The Conversation’s daily newsletter. ]
Bill Barr shows his true colors — and they’re terrifying
One of the greatest lessons of the Trump era is one we should have learned a long time ago. The idea of a Republican establishment made up of straight-arrow, patriotic, All-American "adults" has been a myth for decades now, and it needs to be thrown in the rubbish bin once and for all. There may have been a time when most GOP officials, whether conservative or moderate, were "traditionalists" or "institutionalists" or maybe "constitutionalists," but that time is long past. Indeed, at this point there is only one Republican among the 53 in the U.S. Senate whom you could even remotely identify as being in that mold: Mitt Romney. And he is hardly a fearless crusader for truth, justice and the American way.
Trump’s destruction of America started with Ronald Reagan
Donald Trump and his billionaire buddies are letting America die.
The billionaires who make their money from fossil fuels have bought off Trump and Republicans so that they’re denying climate change while a dozen states in the West burn and the Gulf Coast is repeatedly ravaged by hurricanes. Firefighters are using dogs to identify the remains of homes where people died by the smell of burnt human flesh.
Republican Marsha Blackburn reveals she doesn’t know what an ‘Amendment’ is — on Constitution Day
It's Constitution Day in America, which is generally the day in which politicians try to prove their immense knowledge and appreciation for the U.S. founding documents. Occasionally some of them misquote it, instead citing the Declaration of Independence, but Sen. Marsha Blackburn (R-TN) took another route.
"We will never rewrite the Constitution of the United States," she proclaimed proudly on Twitter.
When the Constitution is changed it's called an Amendment and the founding document is rewritten.
As Justice Stephen Breyer has remarked, the Constitution is a “living constitution” that looks to text, history, precedent, purposes, consequences and current values to interpret any text that may have been vague, The Olympian recalled in 2011.