Forget Unemployment, What About Employment?
The media love to talk about the country’s unemployment rate. The unemployment rate, however, doesn’t provide a very accurate picture of how many people have jobs. It just tells you how many people are looking for jobs. Once those people run out of unemployment protection or simply give up looking, they cease to exist.
The employment rate, however, keeps track of how many adults have jobs. That’s potentially a more important economic indicator.
Talk about changes in the unemployment rate all you want, but one fact remains: the employment rate has barely changed over the past three years. In fact, it’s near a 30-year low.
Employment rates spiked in the late 1990s and early 2000s, when about 64 percent of American adults had jobs. For the past three years, the employment rate has been stuck near 59 percent. The number quivers ever so slightly, but it never makes an upward bound that indicates a wealth of job openings for Americans.
The last time that the employment rate was lower was 1983, when it fell below 57 percent.
There are some problems with using the employment rate as a significant economic indicator. The biggest problem is that it doesn’t account for why some adults don’t have jobs.
If the rate fell to 50 percent, that could simply mean that households only need one source of income to thrive.
But everyone knows that isn’t the case these days. Some families certainly choose to have one adult stay home to watch the kids (because daycare has become too expensive for them to afford), but wages have remained stagnant for over a decade.
Stagnant wages mean that every adult in a household who is capable of working will likely look for a job.
At certain points in history, one could interpret low employment positively. Today, it just reveals how few opportunities adults really have.
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