Labor force participation rates paint a bleak economic picture
Unfortunately, it is hard to get where you want to go if you do not first acknowledge where you are.
Recently, the Liberty Foundation highlighted the fact that the national Labor Force Participation Rate hit a 37-year low, with less than 63 percent of working-age Americans actively working or looking for work. The last time America had such a low labor force participation rate, “Saturday Night Fever,” starring John Travolta, was premiering for the first time in New York.
Alabama’s labor force participation is particularly discouraging. According to Liberty Foundation research aggregating Bureau of Labor Statistics (BLS) data, Alabama’s total labor force participation rate through 2013 was 58 percent. That number is down 1.3 percentage points since 2009 and 4.4 points since 2003.
African-Americans in Alabama have seen some of the sharpest declines in labor force participation. Slightly more than half of the black population is working or actively looking for work. That figure has dropped from 58.2 percent in 2009 to 52 percent in 2013.
Labor force trends are important because they can tell us more than the BLS’ official unemployment figures. The official unemployment calculation (U-3) essentially divides the total number of unemployed by the civilian labor force to arrive at an unemployment percentage. If unemployed Americans leave the workforce because they stop looking for employment, the official unemployment rate may actually improve, but the economic prospects for the individual and the economy do not.
Alabama and the United States as a whole are not even close to the economic engines they need to be to effectively employ their citizens. Americans need to wake up and realize the perilous nature of the situation. National government policies are not helping Americans find jobs, and state policies are either making it worse or not able to overcome those negative impacts.
We already face demographic hurdles with the Baby Boomers nearing retirement age and leaving the workforce. Adding massive numbers of discouraged workers to the mix will only increase the incentive for politicians to squeeze the American workforce to shoulder likely increases in government programs, benefits and social safety nets.
Unless a return to the economics of the Carter administration is the goal, the United States and Alabama should do everything in their power to make creating jobs and starting a business as easy as possible.
With upcoming elections in mind, look for politicians who actually understand labor force and unemployment dynamics. Many of them will talk about going in a positive direction, but, without an appreciation of current labor realities, it will be impossible for them to know how to get there.