In periods of economic growth, the jobs market is filled with opportunities. Individuals are able to quickly find jobs at competitive wages. But today, we have the exact opposite.
The average civilian labor force participation rate for the U.S. economy in 2012 was 63.7%—the lowest rate since 1979. (Source: Federal Reserve Bank of St. Louis web site, last accessed April 8, 2013.)
In March, the rate dropped even lower. Last Friday, the Bureau of Labor Statistics reported that the labor force participation rate declined to 63.3%. (Source: Bureau of Labor Statistics, April 5, 2013.) The labor force participation rate decreasing in the U.S. economy means that an increasing number of individuals in the jobs market are becoming discouraged—they’re giving up looking for work.
In March, there were more than 800,000 discouraged workers in the U.S. jobs market.
In the first quarter of 2007, the number of individuals not in the labor force was 77.7 million. Fast-forward to the first quarter of 2013, and this number has reached almost 90 million individuals. (Source: Federal Reserve Bank of St. Louis web site, last accessed April 8, 2013.) This represents an increase of more than 15.8%.
With all this said, let me ask this one question: if a significant number of Americans is becoming discouraged and leaving the labor force, what does that say about economic growth in the U.S.? There is no rocket science behind this; a high number of individuals working means economic growth, while a lower number means the contrary.
The official unemployment rate suggests that yes, the jobs market is improving. But digging into the details shows that it is fundamentally tormented. The “official” unemployment figure does not paint an accurate picture of the real unemployment problem in this country.
Where will all the discouraged workers get help? Consider this: in December of 2007, there were 7.1 million Americans receiving federal disability benefits. In March of this year, it reached 8.9 million—an increase of more than 25%! (Source: Wall Street Journal, April 7, 2013.)
Unless the jobs market improves (and I don’t see it improving anytime soon), the U.S. economy will continue to suffer and the national debt will continue to increase, as the government does more to help its citizens. A national debt of $20.0 trillion is just around the corner.