The Bureau of Labor Statistics defines the labor force as the percent of the civilian noninstitutional population that is working or is seeking employment. During the 1950s and 1960s, the percent of Americans in the job market held steady at about 60 percent and then began rising in the 1970s as more women entered the paid job market. According to the BLS, the labor force participation rate reached its high of 67.3 percent in the year 2000. Remember this is the percent of Americans who are in the job market, employed or not.
The market-oriented liberal think-tank, the Employment Policies Institute* Employment Policy Institute has just released an analysis reporting that the labor force participation rate has dropped to 62.8 percent of the civilian population. That rate was last seen thirty-six years ago in 1977. Citing the latest BLS data, the EPI calculated that the U.S. economy added about 204,000 jobs last month. Now the bad news. The EPI further noted:
While 204,000 new jobs is a better number than we have seen recently, the month-to-month signal is potentially murky. At a time like this it's useful to step back and take stock of the larger picture. The larger picture, however, is grim. We need 8.0 million jobs to get back to the pre-recession unemployment rate, and at the average rate of growth of the last 12 months, that won't happen for another five years. The unemployment rate has improved substantially from its peak exactly four years ago of 10% in October 2009. However, most of that improvement was not for good reasons, it was due to the growth in the number of "missing workers"—people who have dropped out of, or never entered, the labor market because jobs opportunities are so weak. There are currently roughly 6.1 million missing workers, and if these workers were in the labor force looking for work, the unemployment rate would be 10.8 percent instead of 7.3 percent.
In other words, the reason that U.S. unemployment rate declined once the financial crisis abated is largely because so many Americans have given up seeking a job. This suggests that the Obama administration's policy of trying to regulate our way to prosperity by piling on more federal rules like minimum wage hikes, new health insurance mandates, expanding Sarbanes-Oxley requirements, setting limits of carbon dioxide emissions, ad infinitum, has failed. Who knew?
*Policies v. Policy—search results can be so confusing.