When the latest jobs report comes out Friday, look beyond the top-line number. For months now economists have suggested that the low unemployment rate—4.1% as of last month’s report—implies that America is at or near full employment. Yet the labor market is still below its prerecession peak, with about two million jobs missing. Many of those workers have joined the disability rolls. Others have simply dropped out of the workforce in favor of leisure time.
An indicator is the employment rate, defined as the proportion of Americans 16 and older who are working. It is always less than 100% because some people of working age are retired, in school, or in other nonmarket activity. Just before the 2007 recession, the employment rate peaked at 63.4%, meaning in that boom time over one-third of the working-age population wasn’t working. The rate reached a low of 58.2% in November 2010, and it has now recovered to 60.2%. Still, that’s more than 3 percentage points shy of the prerecession peak.
(Edward Lazear in the Wall Street Journal)
I have come to take “unemployment” rates not with a grain of salt, but with outright derision, because they don’t count those whose spirits got so crushed by a down economy that they stopped looking for work or hyped a minor disability (something they perhaps had been working through for years) into a successful disability benefits claim.
When the economy is strong, people work through their disabilities. When the economy weakens, people rationally decide to accommodate their disabilities, rather than continuing to work or to seek low-paying jobs.
All Presidents manipulate numbers to make themselves look good. People dropping out of the job market during the recession Obama inherited made the recovery, through the lens of unemployment rates, look stronger than it really was. Trump is riding stock market indices, which may indicate something much more sinister than his mastery of the economic beast.
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I would a thousand times rather have dinner with secular liberals of a certain temperament than with a group of religious conservatives who agreed with me about most things, but who have no sense of humor or irony.