U.S. 4.9% unemployment rate would merit a celebration but these aren’t normal times
The U.S. unemployment rate just fell below 5% for the first time since 2008. Normally, this would merit a celebration. But these aren’t normal times.
The economy is better than it was in the Great Recession, but not even President Obama is ready to declare it’s booming.
In a special speech Friday touting the job gains during his presidency, Obama admitted there’s more “to tackle.”
“We should be proud of the progress we’ve made…we’ve recovered from the worst economic crisis since the 1930s,” Obama said. He doesn’t believe he gets enough credit for creating over 14 million jobs.
People as diverse as Democrat Bernie Sanders and Republican Donald Trump don’t put it gently. They claim the “real” unemployment rate is much higher. Sanders calls the economy “rigged,” and Trump says the U.S. never wins anymore.
The political jabs reflect the mood of the nation, even if the allegations aren’t fully supported by data.
There are three key reasons why everyone from Main Street to Wall Street isn’t cheering 4.9% unemployment.
1. Fewer adults are working
Only 62.7% of adult Americans are working. The so-called Labor Force Participation rate hasn’t been this low since the late 1970s. The rate measures how many people over age 16 are working or actively seeking work. Back in the ’70s, it was low because fewer women worked outside the home.
That’s not the story today. Now, three factors are driving the decrease in workers.
The first is that a huge part of the adult population, Baby Boomers, are retiring. That’s expected and healthy. It explains about half of the decline in the workforce.
The second is more young people are going to college and graduate school. They are studying more, which should be a positive for the nation.
But the third one is alarming: some people have just given up on finding work. It’s hard to quantify how many people fall into this dropout category, but it’s large enough to matter. Politicians like Trump talk about it in stump speeches.
The Wall Street Journal estimates that about 2.6 million of the roughly 92 million American adults who don’t work want a job but aren’t looking for one.
