Policy: Labor

EXography: Employment keeps sagging in the Obama recovery

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Source: Bureau of Labor Statistics Opinion,David Freddoso,Jobs,Labor,California,Colorado,New York,Texas,Economy,EXography,Interactives

When President Obama took office in 2009, the U.S. economy was in the midst of the Great Recession of 2008. Five and a half years later, that historic swoon remains his excuse for continued economic stagnation.

Whoever or whatever is to blame, neither his efforts nor luck nor a natural rebound have managed to restore America's job market to what it was in better times.

The July 3 jobs report was a reminder that the economy is at least creating jobs again, albeit at a rate that barely keeps up with population growth.

And national and state unemployment rates have shown improvement since the job market bottomed out in 2010.

But as the recovery unfolds, it's becoming increasingly clear that another, perhaps more relevant measurement of the U.S. labor market has simply fallen down and cannot get up.

This is the employment-population ratio — that is, the employment rate, or the share of working-age Americans who currently hold jobs.

The unemployment rate measures how many Americans are out of work who are actively seeking jobs.

But the employment rate takes more people into account, and it shows that the economic crisis ushered in an unprecedented reduction in the share of Americans who are actually at work.

To be sure, the traditional unemployment rate has its use. It allows head-to-head comparisons between states that are useful in figuring out where it's easier or harder to find a job.

It's not as useful to compare state employment rates this way. The employment rate can be skewed as much by a state's demography as by its labor market.

To give one example, the employment rate tends to penalize states that feature large, thriving communities of wealthy retirees.

The employment rate is more useful when you look at its change over time. A large swing hints at significant social and economic changes. And if those changes prove to be lasting, they signal a dramatic shift in the economy.

The accompanying charts illustrate that such changes have indeed occurred and do appear to be lasting. They suggest that labor markets in the U.S. and many of its large, important states were crippled in the downturn.

The share of working-age Americans who hold jobs has fallen to a multi-decade low, and it has stayed there.

Rather than healing from their injuries, these labor markets have adapted to a new normal in which fewer people work and seek work.

Texas, which sports a dynamic and resilient state economy, was perhaps more prepared to weather tough times than its peers.

In the last seven years, the rapidly growing Lone Star State suffered shallower wounds and is close to healing.

During this period, which includes both the recession and the recovery, Texas' employment rate has jumped past the U.S. average, as well as those of New Jersey and Illinois.

Texas, the adopted home of many immigrants, has managed to put them to work quickly. This has dramatically widened the distance between its own employment rate and those of states with similar stories like California and New York.

Colorado's numbers tell the story of a state whose a relatively dynamic economy and young population have not prevented employment from becoming increasingly scarce.

The Centennial State's GDP grew by 8.6 percent between 2010 and 2013, representing one of the stronger state performances. Yet fewer and fewer of its residents are holding down jobs.

Colorado's employment rate sank from a very high 70 percent in May 2007 to 63 percent in December 2013. It has only just begun to recover in recent months.

And even now, excluding the recent economic hard times, one would have to go back to the Carter presidency to find a time when a smaller share of working-age Coloradans held jobs.

David Freddoso is a Washington Examiner columnist and former editorial page editor for the Examiner. He is also the New York Times-bestselling author of "Spin Masters: How the Media Ignored the Real News and Helped Re-elect Barack Obama." He has also written two other books, "The Case Against Barack Obama" (2008) and "Gangster Government" (2011).
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