171,000 New Jobs, 10,000,000 To Go

Patrick has already provided a good update on yesterday’s jobs report. I think the overall message behind this report — like the previous one — is that things are okay, and better than they were during the worst moments of this downturn, but they’re not great. More important, it still doesn’t look like we are in full recovery. Payrolls grew by 171,000 this month, which is above the 130,000 needed to accommodate the growing population, but is no where near what would we need to be in full recovery mode. In fact, according to my Mercatus colleague Keith Hall, considering our aging population and other factors, it would take ten years to get back to full employment at this rate. 

Labor-force participation has increased slightly for the second month in a row, rising to 63.8 percent. But it’s still incredibly weak; over the summer that number reached its lowest level in more than 30 years. Moreover, it also means that some 6 million Americans have now given up on being in the labor force. 

As AEI’s James Pethokoukis also noted this morning, “If the participation rate had just stayed steady all year, the unemployment rate would be 8.2%,” rather that the current 7.9 percent.

Employment ratio, an important labor market indicator, also increased this month but remains very low, at a 58.8 percent. The economy grew by 171,000 jobs this month, but we are still 10 million jobs short of getting back to the 2007 employment ratio of 63 percent.

I like this summary of the job report by Hall: “We are walking, not running.” This is a sad state of affairs three years into the so-called recovery. 

Finally, here is a chart to keep in mind.

The pretense of knowledge is a powerful thing, as is the illusion that our lawmakers have the ability to fix things through heavy-handed interventions.