The Incredibly Shrinking American Workforce

The official unemployment rate tells us less and less

Friends,

This month, the Bureau of Labor Statistics reported that the labor participation rate — the percentage of people of working age who are working or actively looking for work — is now down to 61.5 percent. That’s 0.6 percentage points lower than it was at the first of the year.

In other words, the U.S. economy has lost 1 million workers since January.

It’s the lowest level of labor participation in 50 years outside the pandemic.

The official unemployment rate is 4.2 percent, which is considered relatively good. But don’t be fooled. That’s 4.2 percent of people who are working or actively seeking work. If you add in all the people who are no longer working or seeking work, the official rate would be far higher.

What accounts for the disappearance of so many workers? Some baby boomers have taken early retirement. Some workers have been caught up in Trump’s undocumented dragnet.

But the biggest reason is the scarcity of stable, well-paying jobs.

Lots of people have concluded it’s not worth it. The cost commuting to — or paying for childcare in order to hold down — a shitty and insecure job has led them to give up on paid work altogether. They’re living more simply, moving in with parents or friends or adult children, or just doing without.

The best measure of how America is doing isn’t the unemployment rate, or the stock market, or the rate of economic growth, or the inflation rate, or the average wage.

It’s how well most Americans are living. The reality is that most Americans are struggling.