The labor force fell by 260,000 in December, and the labor force participation rate fell to at 64.3%, the lowest point of the recession. Incredibly, the labor force is now smaller than it was before the recession started, so the pool of “missing workers,” i.e., workers who dropped out of (or didn’t enter) the labor force during the downturn, remains large. We can estimate its size in the following way. The labor force should have increased by around 4.2 million workers from December 2007 to December 2010 given working-age population growth over this period, but instead it has fallen by 246,000. This means that the pool of missing workers now numbers around 4.4 million. If just half of these workers were currently in the labor force and were unemployed, the unemployment rate would be 10.7% instead of 9.4%. None of these workers is reflected in the official unemployment count, but their entry or re-entry into the labor force will contribute to keeping the unemployment rate high.
-Heidi Shierholz of the Economic Policy Institute
So, unemployment came out today at 9%, down from 9.4% in December. It’s not because more people are finding jobs. It’s because more people are GIVING UP on looking for work. It’s scary because a lot of these people are qualified….capable….but there is no work for them. Companies are experiencing the highest profits ever because of the highest productivity gains. They are able to do more with less. Because the economy has been so shakey, they have been wary of making investments (building factories, hiring more workers, etc).
For the private sector to have created 36,000 jobs in January, when 15 million people lost their jobs during the recession is a frightening proposition. We avoided a depression, but got the worst recession ever.
The chart above shows that we hit the breaks on job losses, but have barely had any type of significant recovery. Basically we stopped going down, but there’s a huge hole to get out of…..