Unemployment Rate Still Masking a Recovery on the Rocks
Modest growth in April jobs isn’t enough of a silver lining to hide a bad GDP report and historically low labour force participation rate.
The chief executives of Job Creators Network have stated that the April jobs report is not a cause for celebration. Rather, they point to the bigger picture problems of continuing sluggish GDP growth and a labour force participation rate stuck at a 37 year low.
“Last week, we learned the economy has barely grown at all so far this year, and that’s on top of a very disappointing 2.4% growth for all of 2014,” said Alfredo Ortiz, President and CEO of the Job Creators Network. “4% growth is the recovery we need but don’t have; 3% is breaking even; and less than that is a recovery on the rocks.”
“One reason we’re not growing like we should is that people are no longer looking for work like they used to,” noted Ortiz. “The labour force participation rate has been less than 63% for a full year, for the first time since March of 1978.”
Last month’s jobs report showed the labour force participation rate, a measure of the percentage of working age adults in the labour force, remained stuck at less than 63% for a full year. This important measure remained at 66% or above for most of two decades prior to the 2008-2009 recession. The chronically lower participation rate means more than 7 million additional Americans are not working, yet not counted as unemployed by the official measure.
“We will not row our way to a robust recovery if so many people are no longer looking for an oar to pull,” concluded Ortiz. “Whether the issue is regulation, healthcare, minimum wage hikes, or our convoluted corporate tax system, politicians need to get government out of the way so the cost of hiring can come down.”