The US unemployment rate fell below 5% in February, the first time this has happened since 2008. Good news? Not exactly. Here are three reasons why everyone isn't celebrating:
1. Fewer adults are working
With only 62.7% of adults working, the Labor Force Participation Rate is as low as it has been since the 1970s. The Baby Boomers are retiring, more people are going to college and graduate school and most alarmingly, many people have just given up on finding a job.
2. Long-term unemployment is still high
A lot of people who have been searching for jobs for a long time simply can not find them. Around 2.1 million Americans have not been able to find work for more than 6 months. The government calls these people 'long-term unemployed.'
3. Wage growth is anemic
The median income, once adjusted for inflation, has been the same for the past 20 years. What does this mean? It means that middle class families have seen stagnation rather than growth- they are staying afloat instead of swimming ahead.
http://money.cnn.com/2016/02/06/news/economy/obama-us-jobs/
With GDP and the US economy growing, is it possible that there could be another reason for the low labor market participation rate? Housing and job markets are booming from what they were less than ten years ago, and it seems slightly unreasonable for millions of workers to feel "discouraged" from finding jobs. Unless, of course, some of the babyboomers were good investors and able to retire early.
ReplyDeleteOne very interesting thing that this article shows is that about 2.6 million American adults who don't work want a job but are not looking for one. This people is not counted as unemployed because they are not looking for a job for different reasons, but mainly because they are discouraged workers that just decided to stop looking for a job because they couldn't find one. It would be interesting to know if the government is making any policies that show this people that if they want a job and they look for one they can find one, something like a police that encourages people to find a job if they want one and are not looking for it. Another big issue is the 2.1 million of Americans that are long term unemployed, it would be interesting to know if the government is focusing on this portion to decrease unemployment, because in the long run policies that fix this problem are the ones that are going to decrease the unemployment rate and the natural unemployment rate.
ReplyDeleteI think this just goes to show that there are so many other factors that need to be taken into consideration when assessing the unemployment rate. While it might look good on paper, I'm sure many people don't realize factors such as having fewer adults in the labor force overall. Also the statement about wage growth being anemic caught my attention simply because there has been a lot of talk about raising minimum wage. I could see how raising minimum wage could potentially both help and hurt unemployment. It is definitely something that would have to be considered very carefully, like many people have mentioned in other posts as well.
ReplyDeleteI think the reason that our GDP is growing and our economy is on an upward trend, even though our labor force is struggling, is the fact that most of our GDP is made up of services (79.6%). With increased level of technology, more services are produced while uses less labor and the labor that is used needs to be more skilled.
ReplyDeleteOne aspect the article highlights is the labor force and its decline. Two things are happening to the labor force, Baby Boomers are retiring and more people are staying in school longer or pursuing an education. I think what is undermined is the value of socializing. It's something the numbers don't show. People get jobs based on their resume but most importantly who they know. We live in world where socialization is done behind a screen. It shows you the advancements made over time but also the impact of technology. It has a social impact as well as an economic impact.
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ReplyDeleteThis article is really interesting as it highlights the discrepancy in the growth and unemployment rate. The middle class is stuck with almost no increase in real wage and lower unemployment rate in a growing economy. It is not surprising to see how a labor force participation rate is decreasing as more people are pursuing college education because of the increase in the competitiveness of the job market.
ReplyDeleteThis article is really interesting as it highlights the discrepancy in the growth and unemployment rate. The middle class is stuck with almost no increase in real wage and lower unemployment rate in a growing economy. It is not surprising to see how a labor force participation rate is decreasing as more people are pursuing college education because of the increase in the competitiveness of the job market.
ReplyDelete