16 states now at four-year unemployment lows, but jobs recovery is still behind past recessions

Just as it does every month one week after it announces its estimates of unemployment and related statistics, last Friday the Bureau of Labor Statistics reported its evaluation of the employment situation in the individual states and regions. As has been the case for much of the past four years, there is good news and bad in the numbers.

As Niraj Choksi at the Washington Post points out, 16 states now have unemployment rates lower than they have been in four years:

   In all but two, October unemployment was at its lowest level since late 2008 or the early months of 2009. In Minnesota, unemployment hasn't been this low since January 2008. And it's been more than a decade since North Dakota saw an unemployment rate of 2.7 percent as it did in October. (The last time was August 2001.) In all, unemployment dropped from September to last month in 39 states. And only three states-Arkansas, Oklahoma and Ohio-saw nearly two-year highs.

   But the situation isn't as rosy as those statistics suggest. The jobs recovery still pales in comparison to the recoveries following the 1981, 1990 and 2001 recessions, according to data from Doug Hall, director of the Economic Analysis and Research Network at the Economic Policy Institute, a think tank focused on the needs of low- and middle-income workers.

In fact, 70 months after the Great Recession began in December 2007, in only nine states is the official unemployment rate now below the five percent pre-recession average. And that only tells part of the story.

Just how slow the growth in jobs has been nationwide is reflected in the fact that in only one state-North Dakota-has job growth outpaced population growth. That is a factor of the oil production boom in the state's Bakken formation. For every other state, however- as we've reported for years-the drop in the unemployment rate is mostly due to Americans leaving the work force. As of October, the labor-force participation rate was 62.8 percent, its lowest level since March 1978.  

A portion of that is demographic. The first wave of post-World War II baby boomers is retiring, although the percentage of people over 65 who have continued working-out of desire or necessity-has grown significantly since 2008. EPI estimates that about one-third of drop in the civilian work force is a consequence of such retirements. Meanwhile, labor-force participation among adults 16-24 is continuing a long time downward trend and is now nearly nine percent below its 1987 peak of 79.1 percent. But the key statistic, the most worrisome one, is that job participation of people in their prime working years-25-54 years old-remains down from its 2007 peak of 80.3 percent at 75.8 percent.

Despite the millions of private-sector jobs created since the recession was officially declared over in the summer of 2009, there continues to be a substantial jobs deficit and that has distorted the unemployment rate. Excluding retirees, EPI calculates that if those who have dropped out of the labor force or never entered it because of the weak economy had chosen to stay in, the official unemployment rate right now would be 10.8 percent, not 7.3 percent.

What these numbers point to, have pointed to for years, is the need for what many economists and activists have long sought: a multi-faceted full employment program.

Four years ago next month, President Obama held a jobs summit that was billed as a think session to kick-start employment growth. Unfortunately, partly because of the summit's agenda, which failed to focus on the big picture, and partly because even the modest proposals that emerged from it were hamstrung by naysayers in Congress, the improvements that could have been made were not. Which means the economic pain of millions of Americans was not alleviated even though the policy tools were available to do so.

And they remain so. Heading the pack are the setting forth an industrial policy like those every other developed nation and some emerging economies already have and investing in rebuilding and innovating America's crumbling infrastructure. But few of our elected representatives have come close to making such policies a priority or even mentioning them at all. What will it take to get them to show leadership in this realm?




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