Wonkbook : The most uncomfortable question in today’s jobs report
▻http://www.washingtonpost.com/blogs/wonkblog/wp/2013/08/02/wonkbook-the-most-uncomfortable-question-in-todays-jobs-report
Spend much time looking at the drop in the percentage of Americans participating in the labor force and you’re likely to think not. Unemployment has fallen 2.5 percent from its post-recession peak, but the share of working-age adults with jobs has barely budged. This leads to scary graphs, like this one, or scary stats, like this one: If labor-force participation had held at its pre-recession peak, unemployment would be around 9.7 percent today.
The implication of these numbers is that the recovery is a mirage. The official unemployment rate only counts people actively looking for work. It’s dropped less because people have found work than because they’ve stopped looking. Ergo, there’s been no recovery — just a hardening of the post-recession labor market.
This is a story I gestured at on Thursday. But Marc Goldwein of the Center for a Responsible Federal Budget pointed me towards an Urban Institute paper that complicates the situation considerably.
The popular (well, popular among depressed econ wonks) image of discouraged workers sighing and deleting their Monster.com account once and for all is wrong. The rate of labor force exit is actually lower than it was in the aftermath of the 2001 recession. It’s labor force entry that’s suffered.
In particular, it’s suffered among women — and it’s really suffered among young women – who are a lot less likely to enter the labor force than they were in 2002 and 2003.
That is, in certain ways, a more encouraging trend: Discouraged workers who leave the labor force typically see their skills erode. Young people who delay entry are often staying in school longer, gathering skills that will ultimately prove valuable to them (and student loan debt that will prove burdensome).
But that comforting possibility surely doesn’t explain all of the drop in entry we’re seeing among younger people. And it doesn’t really explain any of the drop in entry we’re seeing among older people.
There’s been a recovery. The growth numbers, and the payroll numbers, and the consumer confidence numbers, are all enough to tell us that. But not as much of a labor-market recovery as the unemployment rate indicates. A lot of people have been left behind, or perhaps more accurately, been discouraged from starting at all.