September 05, 2015
That is what it told readers in its article writing up the data. The piece indicated surprise that wages are not rising more rapidly given the relatively low unemployment rate:
“Over the past 40 years, unemployment has almost never been as low as it is today, with the exception of a few years in the late 1990s.”
This part is not quite right. The unemployment rate was below the 5.1 percent rate reported for August from May of 2005 until April of 2007, so an unemployment rate this low is not quite that rare.
The other part of the story that has been widely noted is that employment rate, the percentage of the population that has jobs, is down by more than three percentage points from its pre-recession level. This is true even if we just look at prime-age (ages 25-54) workers.
Since no one has a very good story as to why 3 million plus people just decided that they didn’t feel like working, the most obvious explanation is that these are people who still want to work but have given up looking for jobs because of the weak state of the labor market.
It is also worth noting that if this decline in the labor force reflects something other than the weakness of the labor market, virtually no one saw it coming before the recession. The economists who want to blame some supply-side factor as the cause of the reduction in the size of the labor force therefore need to explain why they were unable to see this factor before the recession. They also need to explain why anyone should believe their understanding of the economy is better today than it was in 2007.
Comments