The Real Employment Problem

Supposedly the economy is rebounding.  Years of stimulus spending by the administration and over $3 trillion in quantitative easing by the Fed are allegedly working.  Or are they?

The Bureau of Labor Statistics reported in October that the unemployment rate, U3, declined very slightly to 7.2%.

Concurrently, the BLS noted that the unemployment rate to include those marginally attached to the workforce, or U6, was 13.6%.

These statistics, however, hide a painful and tragic reality.  While unemployment rates have dropped, the labor force participation rate has also declined significantly in recent years.  The labor force participation rate in September 2013 was 63.2%, the lowest since 1978.

The implications of the declining rate are profound.  While unemployment appears to be lower, the lower labor force participation rate sharply mitigates the “alleged” improvement in the economy — and implies that a growing number of Americans are either voluntarily or involuntarily dropping out of the workforce.

Additionally, the statistics provided by the Bureau of Labor Statistics disguise many other disturbing labor trends.

For example, the unemployment rates for young people and minorities are substantially higher than for the nation as a whole.  The teenage unemployment rate is over 21%.  The unemployment rate for blacks was 12.9% in September, with Hispanic unemployment at 9%.

Behind these higher rates of unemployment is the education and experience gap of our young workers and minorities.