This weekend was the best time to celebrate what makes America the greatest nation: freedom.
Despite this millions of Americans have a lot to worry about not the least of which is putting food on the table. Those who are unemployed, underemployed, or who have dropped out of the job market probably didn’t have a heck of a lot to celebrate.
Before the long Independence Day Weekend, the June jobs report was released, but it was a like a sparkler with no spark. Employers added an estimated 223,000 jobs, causing the unemployment rate to fall from 5.5 to 5.3 percent. Hold your flag waving though.
The drop in the unemployment rate was not due to more Americans being hired, but more workers dropping out of the job market entirely –whether those are older Americans who are choosing retirement, or younger workers who have given up looking. As CNBC explains, the real unemployment rate is about 10.8 percent. The percentage of Americans in the workforce –i.e. those who either have a job or are actively seeking on – dropped from 62.9 to 62.6 percent, a 38-year low. We’ve lost nearly four decades of worker gains from the rise of women in the workforce during the 90s To economic booms.
Two contributing factor to our hemorrhaging workforce are retiring Baby Boomers and Millennials postponing their entrance into the workforce and staying in school to earn college and post-grad degrees. According to an AP report, less than 39 percent of 18- and 19-year-olds are employed, down from 56 percent in 2000. For people ages 20 to 24, the proportion has fallen to 64 percent from 72 percent.
Let’s not forget that the part-time worker effect is also contributing to our labor market woes. Some 6.5 million Americans want full-time jobs but are forced to take part-time positions. That’s an increase of 2 million workers since before the recession began.
An aging population is sending an outsize proportion of Americans into retirement. Many younger adults, bruised by the Great Recession, are postponing work to remain in school to try to become more marketable. Global competition and the increasing automation of many jobs are holding down pay.
Many economists think these trends will persist for years despite steady job growth. It helps explain why the Federal Reserve is widely expected to start raising interest rates from record lows later this year even though many job measures remain far below their pre-recession peaks.
Many economists also point to the Obama administration's health care reforms for increasing part-time employment. The law requires companies with more than 100 employees to provide health insurance to those who work more than 30 hours.
Michael Feroli, an economist at JPMorgan Chase, says this could account for as much as one-third of the increase in part-time jobs.
Plus, wage growth is like jello. It jiggles but doesn’t go anywhere. The average hourly U.S. wage was flat at $24.95 – having risen just two percent over the past year. Hard to shell out more for Independence Day when your earnings remain the same but costs at the grocery store or the mall have consistently risen.
We can’t gloss over the assessment that federal policies –specifically ObamaCare – is playing a role here in the growth of part-time workers. The President hangs his hat on the number of newly insured Americans, but I wonder how many more Americans would trade the unpopular government health insurance plan for a fulltime job where they could qualify for healthcare from their employers?
We’ll see how these numbers get revised next month, but this slow erosion of our labor force, is nothing to ignore.