Tuesday, July 10, 2012

Chart of the Day - Employment Ratio Has Never Recovered

The pathetic job numbers have been much ballyhooed, so I won't go much into that, other than to say the key issue is that job creation isn't restoring employment to pre-recession levels. I have always focused on the labor force participation rate in prior articles, but the employment-population ratio caught my attention recently as another important statistic. It is defined as the percent of those over 16 years old who are working. I don't know if that includes those on disability or not. Many economists consider this the most reliable indicator of economic health.

Under Reagan and Clinton, this ratio increased to a peak of 64.6% in early 2000. The current downturn saw the ratio drop significantly; BUT IT HAS NOT RECOVERED! Sorry to shout. This is why everyone feels so miserable about the economy. Regardless of the official unemployment rate, the low percentage of people with jobs has persisted. The gap is a permanent wedge of unemployed that is setting us up for long term social problems. The President thought it more important to focus on passing a health care law that was a sop to interests groups that contributed to his party than in dealing with what is turning into a long term national disgrace. Young college graduates with few prospects became a class of dependents that harm the national economy for years to come. I know this isn't sexy, but the President's policies are responsible for the failure of the economy to recover. We can not afford his re-election.


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  2. This graph was just featured in a major newspaper, of course because it was also published on the blog of a Harvard underwater basket-weaving professor.