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Vol. 76/No. 34      September 24, 2012

Shrinking labor force,
discouragement mark ‘recovery’
(front page)
Contrary to what government figures portray, employment has not recovered in any meaningful sense since the official end of the recession in mid-2009. This has had a discouraging effect on working people.

Rather than a real decline in unemployment, what has taken place over the last few years is a contraction of those the government counts as part of the labor force, as millions who are unable to find work—and often give up trying—are no longer counted for the purposes of figuring the unemployment rate.

The latest figures, announced the day after the Democratic Party Convention, is a case in point. The August unemployment rate went down to 8.1 percent from 8.3 percent the month before, with the Labor Department reporting 96,000 more employed. But the only significant factor in the rate drop was the subtraction of 368,000 workers from the official labor force.

Among those not counted are millions who want a job, including anyone who hasn’t applied for work in the last year. Some 2.6 million of those not considered part of the labor force are categorized as “marginally attached” because they have not reportedly applied for a job in the last month. Among them are 844,000 labeled “discouraged” who have come to the conclusion they have no chance of gaining employment at this time.

The proportion of the population counted as part of the labor force has been steadily declining. Today it stands at 63.5 percent, its lowest level since 1981, and down from 66 percent in December 2007. For men the rate stands at 69.8 percent, the lowest ever since figures began being compiled in 1948.

Long-term unemployment remains at record-high levels. According to the Labor Department, 40 percent of all jobless workers have been out of work for more than six months.

Some 8 million seeking a full-time job are working only part-time, 3.5 million more than five years ago.

Recessions in the U.S. over the past several decades have taken place in the context of a longer-term decline in the curve of capitalist development. Each successive downturn in production and employment tends to be deeper, recovery shallower and more drawn out.

It is instructive to compare the trends of the last few recessions. A look at the employment to population ratio—a straight percentage of the total population that is employed—is revealing.

Several months after the official end of the 1981-82 recession, the percentage of the population with a job rebounded, matching the pre-recession level in little over a year, and then exceeding it.

The employment to population ratio took more than three years to fully recover following the brief recession of 1990-91.

What has taken place this time around is starkly different. More than three years after the official end of the recession there is no sign that any recovery is beginning to emerge. The employment to population ratio dropped sharply during the recession. In June 2009, after the recession was declared officially over, the ratio continued its downward trend for about another half year before leveling off. Since 2010 it has hovered around 58 percent, 5 percent lower than before the recession began.

Of nearly 13 million workers laid off between January 2009 and December 2011, only 57 percent were employed at full-time jobs at the beginning of this year. One-third of them have had wage cuts of 20 percent or more.

Household incomes have declined more since the official end of the last recession than they did during the recession itself, according to a report by Sentier Research. From June 2009 to June 2012, real median household income fell 4.8 percent, after declining 2.6 percent during the recession.

The biggest impact has been on African-Americans, with a drop in median income of 11.1 percent. Also disproportionately hit are those between the ages of 55 and 64, who have experienced an income decline of 9.7 percent.
Related articles:
Employment to population ratio during 5-year periods for last 3 recessions  
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