Behind the Employment Numbers

The March employment numbers came out Friday and they were, in a word, disappointing. 88,000 jobs were added to payrolls and the unemployment rate dropped by .1% to 7.6%, But 496,000 people left the workforce and the workforce participation rate decreased by .2% to 63.3%.  That participation rate is the lowest in 35 years.  The participation rate is particularly important because that means that fewer people are pulling the cart and more people are riding.  Low worker participation aggravates all our country’s fiscal problems.  Here are worse numbers.  Since the start of President Obama’s first term, 10 million people have been added to the official poverty numbers, food stamp participation has increased by 70% to almost 48 million participants, and a total of 123,000 have been added to payrolls.  This employment number is put into perspective when one realizes that the economy must add about 125 to 150 thousand jobs each month to keep up with the natural increase in the working age population.  If the same number of people were in the work force today as in the start of 2009, the unemployment rate would be over 11%. Millions of people have retired, gone on disability, or have become discouraged and simply dropped out of the work force.  Since the technical recovery started nearly four years ago, we have had the weakest job growth and the weakest rate of GNP growth since World War II.  I’ve come across a graph by Andrew Puzder that is really useful in showing what has been happening.  He has basically taken the year over year percentage of job growth compared to the working age population growth by month since 1960.  If the ratio is more than 1, jobs are being created at a rate faster than population growth, between 0 and 1 jobs are being created at less than population growth.  Below 0, well we’re losing jobs. Recessions are noted with the light gray bars.  As you can see job growth has tended to increase sharply coming out of recession, with the most spectacular growth coming out of the recession in the early Eighties.  Our last recession has been different.  Since the start of the technical recovery, jobs have not kept pace with population growth.  Why has this been?  In later posts I’ll try to suggest some answers.  Woody Smith photo sssas_zps11de3694.png