Even Obama's bestest fans forever are giving up on him.
For most of his presidency, President Obama has been focused on the economic short run — which makes sense, given that he took office in the midst of the biggest recession since the 1930s. With his big economic speech today, he’s shifting to the long-run, talking about the structural changes he thinks the economy needs to see for the U.S. to prosper going forward.
But anyone who thinks that the short-run battle is over should take a look at a new report by Daniel Alpert over at the Century Foundation. Alpert notes that while the headline unemployment number is well below its recession-era peak, that’s almost 100 percent due to declines in the labor force participation rate — that is, the share of the population that’s either employed or actively looking for work. Don’t believe him? Take a look at this chart [seen above].
The dotted red line is the U-3 unemployment rate, or the number you see everywhere. It can go down for one of two reasons: either more people are working, or fewer people are in the labor force. So which is it?
You see that solid blue line? That’s the employment/population ratio, or the number of employed people divided by the civilian noninstitutional population (aka everyone over 16 who’s not in prison, a mental institution, the military, or a nursing home). It’s barely changed since the nadir of the recession. The share of adults who are working isn’t going up; it’s stagnating. More people aren’t working.
Now, look at the blue dotted line. That’s the labor force participation rate. See how it nearly perfectly tracks the movements of the unemployment rate? That’s a pretty good sign that people leaving the labor force, rather than getting jobs, is what’s driving the latter down.Keep reading…