The latest unemployment report continued a series of positive emanations from the Bureau of Labor Statistics (BLS) which, along with positive reports on industrial orders and housing from other agencies, confirms a growing economy. Growth is the basic economic force that drives all others. Growth is good.
But one doesn't have to look too far behind the data for bad news. Sure, unemployment fell one tick to 5.3 percent but that was largely because 400,000 people left the workforce. The overall workforce participation rate is 62.6 percent, the lowest since 1977. If the employment rate were at 65.7 percent, the level when President Obama assumed office, there would be almost 14 million more people working today.
Somehow the very notion of gainful employment is losing favor with the American people. There are 102 million Americans over the age of 16 who are not today in the workforce. The BLS loftily describes many of these people as "discouraged workers" who are no longer seeking gainful employment. I have long been mystified by the very notion. How does one pay the rent without a job?
The drop in labor force participation has surprised and baffled many economists, and there is debate about whether it is permanent. Of course, many of these people are baby boomers now entering retirement at the rate of nearly 10,000 per day. There was a flood of early retirements during the Great Recession of 2008-2009 that has scarcely abated. Many people in their prime working years were displaced and have never been able to find work at or near the same level of the jobs they lost. Many of them are largely getting along on pensions, savings and Social Security. Also, the participation rate of women in the workforce that was rising in the 1990s began to decline in the 2000s.
More troubling is the 55.1 percent labor rate of young people aged 16-24, down from more than 60 percent ten years before. In the 1990s, 66 percent of this cohort were in the workforce. Many of these people have taken on huge debt to earn college degrees that do not prepare them for jobs in the real world. A frightful number of these millennials have never had a regular job. Predictably they are postponing marriage and home ownership which is negative omen for the economy.
Some people are no doubt working in what has been dubbed the "gig economy." Many employers prefer contractor employees. You don't have to pay them benefits and if there is no work to do, you don't have to pay them anything. The BLS needs a much better handle on this new gig economy.
But even if the gig economy is much larger than we know, we still have a serious labor problem. Work should be readily available and rewarding. We really now have to take a new look at what companies and the government are doing to make employment more attractive. A good place to begin would be a real economic growth policy: investment incentives to increase capital spending, a national program to raise worker skills, reduced anti-jobs regulation, and a commitment to expanding exports.
Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.