False Hopes in the New Employment Numbers
White House economic adviser Alan Krueger greeted last Friday’s employment numbers with optimism, noting that they suggest “the recovery that began in mid-2009 is gaining traction.” His sanguine assessment echoes previous Obama administration claims in 2010, 2011 and 2012 that the recovery was just around the corner. Could it finally be for real?
To be sure, the report’s top line contained signs of hope, such as better-than-expected net job gains and a modest tick downward in the unemployment rate. But this bit of good news was tempered by the fact that more Americans gave up looking for work and dropped out of the labor force last month (296,000) than took new jobs (260,000).
And at 63.5 percent, the share of Americans participating in the labor force — that is, either working or looking for work — has fallen again to last year’s low, which had not been seen since the Carter era. What’s more, this ominous trend obscures the labor market’s true condition because the unemployment rate goes down every time someone stops trying to find work.