The bright spot in this limp recovery has been the unemployment rate, which has fallen to 5.1%. But don’t look too closely, or you’ll notice that the spot is not so bright. In fact, the job market is no better than the rate of productivity, growth in gross domestic product (GDP) or numerous other depressingly underwhelming economic factors.
We’ve frequently pointed out that the oft-cited U-3 unemployment rate is meaningless, as the more people give up looking for work, the lower the rate goes. Can anyone but a government economist think it’s a good thing when the unemployment rate goes down because millions of Americans have stopped looking for work?
A growing number of people – including, we hope, some presidential candidates – seem to be noticing that the labor force participation rate hasn’t been this low since Jimmy Carter was president. It’s now dropped to 62.7%, a level not seen since February 1978.
A Wall Street Journal commentary by Bob Funk, CEO of Express Employment Professionals, notes that, “There is something that the numbers are missing. Economics — and logic — tells us that if unemployment was truly that low … wages would be rising. Instead, wages grew at 0.2% during the second quarter, the slowest rate in 33 years. The median family income in America is approximately $53,000, below where it was before the 2008 economic meltdown.”