Employment Participation Rate More Sluggish Than Ever Before

In my plight to explain the common sense repercussions of current fiscal policies I decided that it may just be better to get the information from the Administration itself. According to […]

In my plight to explain the common sense repercussions of current fiscal policies I decided that it may just be better to get the information from the Administration itself.

According to this graph from the Department of Labor, which measures the percentage of civilians employed by our economy over the last 60-70 years, we see 11 different recessions (highlighted in gray) that have taken place since the data has been collected.

The good news?  After nearly every single recession, we have experienced a fairly quick and substantial increase in employment participation–presumably due to regained confidence in the market and it’s ability to produce employment opportunities–oftentimes resulting in a positive overall statistical trend (i.e. more jobs for more people over time).

The bad news?  Not only was our most recent recession one of the longest we’ve experienced, but our employment participation rate has dropped more than after any other recession and has been the slowest to return to previous levels, while also remaining stagnant longer than after almost any other recession.  I know, that’s a lot of bad news.

With more people out of the labor market, an improvement in the “unemployment rate” most often quoted by the media doesn’t mean a whole lot.  Under current measurements, as people leave the labor pool, the unemployment rate falls, while rising again as they begin to look for work once they have gained more confidence in the economy.  Does that make any sense?

Even though we’ve seen official unemployment “fall” from 10% to 8.3%, we have also see shifting levels of employment participation.  Most recently, even though 120,000 jobs were added in March, simultaneous decreases in labor participation have kept the official unemployment rate at 8.2%.  Sure, some people found work, but many also just decided to give up looking anymore.

Throughout history, free economies have strived to improve and profit despite the economic or political  climate.  We can also expect our own innovative society to find a way to improve, despite unpopular policies.

However, there is a point when policies become so burdensome and unpredictable that, regardless of the business climate of the moment, corporations, businesses, and innovators have no choice but to restrain, or export, growth in order to maintain stability and longevity.  (Just ask Google, Apple, Facebook, Amazon, and many other of our largest corporations who all have moved large chunks of their “operations” to places like Ireland who has some of the lowest tax rates in the world.)

The results?  Lack of confidence in the labor market and stagnant employment growth, just like we are experiencing today.

A freer, more stable regulatory environment is our only hope for economic improvement.