Here are a couple of facts to consider about the U.S. unemployment rate of 5.1 percent in August:
- The nation’s jobless rate has not been that low since spring of 2008.
- Unemployment never fell as low as 5.1 percent during Ronald Reagan’s two terms as president.
So, why didn’t more people cheer last Friday’s jobs data? Setting aside political motivations, two reasons seem likely.
First, the number of jobs added—173,000—was the fewest in five months. Second, labor-force participation continues to be low by historical standards. After a period of relative stability just prior to the start of the 2007-09 recession, the participation rate declined sharply and has remained there. Indeed, it is at a level unseen over the last 35 years.
Some say that many people have simply given up looking for work; others maintain that a demographic shift—with the population growing older generally—is the real explanation.
In fact, both factors seem to be playing a role. An analysis by Governing.com shows that for both the 16-24 and 25-34 age groups, the employment-to-population ratio lags pre-recession levels. But each has been trending upward since 2012.
By contrast, the ratio for the 45-54 age group has improved only marginally since mid-2009 and it has retreated again this year.
The only age group that now has a higher participation rate than it did before the recession is the 55-plus segment. At a glance, this might seem to undercut the demographic-shift explanation. But this group continues to be employed at much lower rates than those who are younger, and the fact more are remaining employed merely reflects their financial need to postpone retirement.
Locally, private-sector job growth seems to be gaining momentum, with total employment at a 15-year high. Clearly, both here and around the country there’s reason for optimism.
At the same time, no one should be satisfied with the current levels of labor-force participation. More jobs are needed—especially for those who think the economy has no place for them.
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