National Unemployment Rate Sits at 7.4%
It's Labor Day today, which means that it is time to reflect on the current state of the nation's labor market. According to Wikipedia.org, Labor Day is "a celebration of the labor movement and is dedicated to the social and economic achievements of workers."
The "Great Recession" started at the end of 2007, and the job market has still not even come close to recovering.
As of July 2013, the national unemployment rate sat at 7.4%. Sure, the national jobless rate has fallen over the past couple of years, but we are still well above the 4.9% unemployment rate that was posted in December of 2007.
The U-6 unemployment rate, which is an alternative measure of labor underutilization, currently sits at 14.4%. In December of 2007, the U-6 unemployment rate sat at 8.8%.
The U-6 unemployment rate includes many people who are not included in the "official" employment/unemployment numbers. This includes people who are working part-time jobs but want full-time work, as well as people who have given up on looking for work.
This is one of the biggest problems that the nation currently faces - many people have jobs but are underemployed. These are hard-working Americans with families that have bills to pay. They want full-time work, but they simply can't find it.
Experienced workers with plenty to offer are being forced to take low paying, part time jobs in order to help make ends meet. This is the reason why the average age of a McDonald's worker has increased dramatically over the past decade or so. Remember when McDonald's had their "National Hiring Day" and ended up receiving over a million job applications? The jobs that were typically filled by the younger and less experienced workers are now going to the older workers who simply can't find work anywhere else.
The spillover effect of this is that many young people need these jobs in order to afford school. Many American families simply don't have the funds to help their children with their post-secondary educations, and their kids are unable to contribute because they are finding it nearly impossible to find work. This creates large student loan burdens for many young Americans who are just starting out in the world.
Another problem? Many older Americans who are near or at retirement age are electing to continue working because they simply don't have the means to retire. Many Americans were counting on the equity in their homes to finance their retirements, but the "Great Recession" decimated home values for many across the country. In addition, many American households simply didn't plan for their retirements, and they are now being forced to continue working past the age of 65.
In December of 2007, the labor force participation rate was 66.0%.
In July of 2013, the labor force participation rate was just 63.4%.
The labor force participation rate is the total number of people in the civilian non-institutional population who are either employed or unemployed (which means that they are actively looking for work).
A decline from 66.0% to 63.4% is a massive drop-off. The media tends to focus on the national unemployment rate, but the drop in the labor force participation rate is just as noteworthy, if not more so.
In short, the national unemployment rate may be dropping, but there is much more going on beneath the surface. Don't let a dropping unemployment rate distract you from all of the issues that the labor market in the United States still faces.
Filed under: General Knowledge