Something strange happened with the latest jobs report. A few lamestream press outlets woke up from their Obama-induced daze long enough to recognize that although the unemployment figure is purportedly lower than it was in March, and lower than it has been in some time, things don’t seem quite right with the numbers. Just seeing them grapple with the data and begin to recognize its implications has brought on my latest instance of Obamacare Schadenfreude.
Let’s begin with the National Journal. Today its website ran a story entitled “Forget the Unemployment Rate: The Alarming Stat Is the Number of ‘Missing Workers.'” The story begins by summarizing the “unexpected” state of affairs:
The federal government’s latest snapshot of the unemployment rate offered few bright spots Friday. The economy added 165,000 jobs in April—slightly better than March’s revised number of 138,000 jobs. Unemployment went down one-tenth of a percentage point to 7.5 percent; and health care, retail trade, and the food-services industry added positions.
The glaring caveat to this jobs report is the huge number of Americans who remain out of the workforce. Called the “labor force participation rate” in wonkspeak, that number held steady in April at 63.3 percent—the lowest level since 1979.
The story goes on to speculate about the causes behind the decreased labor force participation rate, explaining that some of the number–but by no means all–can be explained by the fact that the first of the baby boomers have now reached retirement age. The article says that beyond retirees, “Roughly 3 million to 5 million of them left because they could not find jobs, economists estimate.”
But the article doesn’t stop there. It recognizes that decreased labor force participation has serious economic implications for government because it decreases revenues coming in from taxes. Suddenly, in other words, the decreasing labor force in the United States is much more of a matter of concern than it was a year ago when Obama was facing re-election, because it doesn’t bode well for the future of the economy or the budget (something that conservatives have been pointing out for years):
If these workers do not return to the labor market, their absence may alter the country’s budget picture. “One of the biggest problems we face with the baby-boomer bulge in retirement is having enough workers behind them to pay their bills,” says Harry Holzer, a professor at Georgetown University’s Public Policy Institute.
Missing workers can translate to a decrease in tax revenue, coupled with an increase in the use of government benefits, such as food stamps and disability insurance. The number of Americans collecting food stamps hit a high of 47.8 million people in December 2012. A similar spike has occurred in enrollments for the Social Security disability payments.
Since the start of 2007, the percentage of Americans in the labor market has dropped from 66.4 percent to 63.3 percent. In the 1970s and 1980s, the number of working Americans grew—because of the dramatic increase in women holding jobs outside of the home.
Nancy Cook ends her article by quoting a very optimistic prediction that unemployment will eventually fall to around 5.5% by 2017, but then she notes, ominously, “Only then can economists gauge if people have left the workforce because of the downturn in the economy, or if they’ve left forever because the economy fundamentally changed. If that’s the case, the U.S. officially will become a place where the labor market has little use for millions of Americans.”
The National Journal article, though, isn’t the only such piece by a lamestream press outlet today. None other than the Gray Lady herself suddenly woke up and noticed the missing workers: [Read more…]