Friday, November 14, 2014

Two things neither liberals nor conservatives will tell you about our improving economy

Ever since the economy began its slow recovery from the Great Recession, liberals have been pointing out that - as the unemployment rate drops - the labor force participation rate is also in decline. This is usually interpreted to mean that more and more people are so discouraged about finding work, they aren't even trying anymore. Lately conservatives have picked up on this and are using it to discredit the recovery we've been seeing under President Obama's leadership.

But today Pew Research released some fascinating information about those who are "outside the labor force entirely."
By far the biggest chunk of people not in the labor force are people who simply don’t want to be, according to data from the monthly Current Population Survey...Last month, according to BLS, 85.9 million adults didn’t want a job now, or 93.3% of all adults not in the labor force.
Pew goes on to take a look at a subset of those who have dropped out of the labor force - those that are called "marginally attached." This includes those who want a job, but haven't looked for one in the last 4 weeks. Here are the reasons they give for that:

Based on that information, perhaps the most effective way of increasing labor force participation would be to make pre-K universal, provide family leave and improve our transportation systems. Hmmmm...who's been pushing those policies? 

The other issue with our economy that is getting a lot of attention lately is that - even with the number of unemployed dropping - wages are stagnant. Bloomberg suggests that might be changing in the near future. 
The number of unemployed vying for each available job is dropping to the point that bigger wage increases are probably in store for Americans.

About two jobless workers were pursuing each opening in September, the fewest since early 2008 and down from almost seven in July 2009 at the depths of the last recession, according to data compiled by Bloomberg from a Labor Department report issued today in Washington.

The 2-to-1 ratio is the threshold that typically leads to larger pay increases in about six months as employers compete for a dwindling talent pool, according to research by economists at UBS Securities LLC.
For some perspective on that, they provide this graph:
This isn't the kind of news that fires up the rage amongst ideologues. But its important information for us to have when it comes to evaluating the economic recovery that is underway and backing policies that will keep it going. 

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