by Robert Carbery
As The Wall Street Journal and the MSM report on and celebrate unemployment and underemployment being at record low levels, there is a very real and very disturbing trend that is not being covered nearly enough.
The WSJ and others point to the jobless rate hitting a 17-year low last month as employers hire at a robust pace. Nonfarm payrolls rose a seasonally adjusted 261,000 in October according to the Labor Department. This was up from the prior month while undershooting expectations many economists had of 315,000 new jobs.
Unemployment fell to 4.1%, the lowest since the end of 2000. Is the labor market heating up? Or is there something many watchers of the economy are missing?
The WSJ article does mention the real problem few are discussing: the labor force participation drop. The labor force participation rate fell by 0.4% to 62.7% in October, the lowest since May. During earlier booms, such as the dot-com era that ended in the early 2000s, the rate was as high as 67%. Today, the LFP is now hovering around levels not seen since the late 1970s.
A record number of working-age Americans are no longer in the workforce and have dropped out altogether. 95.4 million Americans are no longer working or actively seeking a job. This stat is disturbing and should be discussed more as the significant trend that it is. We are not operating at our full economic capacity and it is only getting worse. The incentive to work is being removed due to generous government subsidies. But that cannot be the only reason. Are we getting lazier? Or is there something more to this story we are missing?
What many in the MSM fail to realize is that the unemployment rate fell to the extent that it did because of the four decade low in people participating in the labor force. The unemployment rate does not cover the amount of folks who have given up looking for work entirely. There were a shocking 968,000 people who exited the labor force in October alone, the third highest total on record.
It appears that the hopes of having potential workers returning to the labor force were not realistic. With more people leaving than entering the workforce, this will likely suppress wage growth as well. Despite MSM-driven narratives detailing a tight labor market, wages have still risen barely at all over recent months and this trend appears likely to continue.
Who are these men and women out of the workforce? Will they ever come back? What is pushing them out of even seeking employment? There are jobs out there. Are they not the right ones? Are we not prepared for today’s economy and the new jobs being added? Will this ever change?
Many questions emerge from this latest jobs report and it is far from optimistic as we move forward during this first year under the Trump administration. Will the coming tax changes alter this reality?
I hope so.
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by Robert Carbery