The employment numbers from this morning are no cause for any sighs of relief, yet. The number of persons employed increased faster than the increase in population–which seems to be unusually small compared to recent months.
In any event, according to my calculation method, this is where we stand (all numbers in thousands):
Civilian Non-Institutional Adult Population: 238,889
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 158,145
Actually employed: 139,206
UNEMPLOYMENT RATE: 13.6%
The labor force participation rate continues to decline, coming in at 64.3% this month, a 30-year low. The actual size of the labor force was 153,690. Using the historical average participation rate of 66.2%, that means the current labor force is running with about 4.45 million fewer workers than it should.
This month’s non-farm payroll increase of 103k new jobs is really just a drop in the bucket. We would need 11 million jobs created to get the unemployment rate back to 5%. Even if there were no increase in population at all, we would need to create 300k new jobs per month for 37 months to get those 11 million jobs back. The only possible bright spot is that, this year, the first of the baby boomers hit 65 and begin retiring. So maybe the actual labor force participation rate is due to naturally drop, as is the size of the labor force.
All we have to do, then, is figure out how to pay social security to more retirees with a shrinking labor force. That should be fun.