That the US unemployment rate continues to fall sounds like good news. The economy added 248,000 jobs in September 2014, and that seems like a lot.
But it isn’t. Unemployment is falling for a different reason.
The Great Recession saw the unemployment rate double from 5% in December 2007 to 10% in October 2009, and now it stands at 5.9%. But during that same time the percentage of adults either employed or looking for employment went from 66% to 65%. Today it’s 62.7%.
The unemployment rate is falling because there are more people giving up than there are new jobs being created.
This graph shows labor force participation at the start of the Great Recession to today. Keep in mind that the unemployment rate has been falling since 2010:
This downward trend will probably level off at some point. But even then it may not be because the economy creates more jobs. Instead, a large number of people – Baby Boomers – will reach retirement age and will no longer be counted.
But who, exactly, is giving up on the prospect of paid employment? Jeb Kinnison summarizes an article from The Economist, which unsurprisingly finds that people from lower socio-economic backgrounds have more dismal educational prospects and thus have fewer or no job prospects.
This in turn makes these men less desirable to women as long-term partners. But, I would add, these men are still convenient as baby daddies, thus increasing fatherlessness, which in turn contributes to a cycle of poor outcomes for children.
This trend is making its way into the middle class, however, as young people graduate with crippling college debt and no job prospects.
Kinnison summarizes The Economist thus:
This disproportionately affects men because males do less well in school, and because women who choose to have children without a partner have welfare as an option in the absence of a job while men rarely have the same option because their children don’t live with them. One consequence is a high incarceration rate, especially for African-American men.
An incomplete list of ideas:
- Allow school vouchers so parents can choose better schools. Competition between schools will improve standards better than any government mandate could.
- Educate young people about the realities of college: Tuition is a business investment, and the potential return is key. An English degree simply isn’t worth as much as an accounting degree.
- Encourage trades starting in middle school. We’ll always need people to fix our cars, furnaces, and plumbing.
- Deregulate small business. The paperwork and senseless regulations one must deal with when starting a business is a huge job killer.
- Require parents (mostly single mothers) to look for work, even minimum wage work, before qualifying for welfare.
- End the war on drugs.