How Close Is the Prime U.S. Workforce to Full Recovery?
We've updated our workforce analysis to include last week's Employment Report for September. The unemployment rate increased to 5.0% and the number of new nonfarm jobs (a relatively volatile number subject to extensive revisions) was below forecast at 156K. Our preference is to look at the data from a longer-term perspective and to give special attention to the data for the core workforce, ages 25-54. We continue to see evidence of major structural changes in the US workforce.
Here is an updated series of charts illustrating some changes that are far more significant than the cyclical impact of the 18-month Great Recession, which the NBER identified as beginning in December 2007.
Jobs Needed to Match Unemployment Lows
The closely watched headline unemployment rate is a calculation of the percentage of the Civilian Labor Force, age 16 and older, currently unemployed. Let's put that into its historical context. The first chart below illustrates this monthly data point since 1990.
In the latest data this indicator remains at 4.3%. The age 16+ population grew by 237 thousand, and the labor force grew by 444 thousand, but the number of employed only grew by 354 thousand.
Today's Civilian Employed would require 900,000 additional job holders to match its interim low in 2007, and we would need 1.8 million to match the lowest rate in 2000.
Jobs Needed for the Prime Age Group
Let's look at the same statistic for the core workforce, ages 25-54. This cohort leaves out the employment volatility of the high-school and college years, the lower employment of the retirement years and also the age 55-64 decade when many in the workforce begin transitioning to retirement (e.g., two income households that evolveinto one-income households).
In the latest data this indicator has remained at 4.3% from the previous month. The cohort population grew by 44 thousand, and the labor force grew by 357 thousand and the number of employed grew by 334 thousand.
Today's age 25-54 labor force would require the additional employment of 1.0 million age 25-54 to match its interim low in 2006 and 1.5 million to match the lowest rate in 2000.