As the economic recovery enters its sixth year, the Federal Reserve Bank of San Francisco has discovered something odd: A record share of the working-age population--67.25 percent--is either employed or looking for work. And those numbers started rising in the middle of last year. It's not unusual for people who haven't had a job to start trying to find one at the end of a recession, but not at this stage of a "mature" recovery. What is going on?
The May issue of the bank's publication Western Economic Developments suggests that last year's welfare reform bill is one of the causes. A report on "Labor Force Developments and Welfare Reform in the United States and the Twelfth District" (which includes Alaska, Hawaii, California, Oregon, Washington, Arizona, Nevada, Utah, and Idaho) looks at one of the largest groups on the welfare rolls--single mothers. Since August of last year, when the welfare bill went into effect, the annual labor force growth rate for single women with families has jumped from 2.4 percent between July 1995 and July 1996 to an annual rate of 6.5 percent in the succeeding months.
Not all single mothers are on welfare, of course. And not every woman seeking work immediately found it. The unemployment rate of single mothers went up during the same period.
The report also notes that "black women, Hispanics, and white teenagers, all of whom have higher than average unemployment rates, accounted for about 60 percent of the total growth in the labor force over the past twelve months"--suggesting that unemployed individuals who might have gone on welfare before last August have instead tried to get jobs.