Last week, the Bureau of Labor Statistics (BLS) released its October monthly jobs report. While nonfarm payroll employment increased by 204,000 in October, the unemployment rate increased to 7.3%. The October jobs report continues to highlight our nation’s anemic economic recovery, and is especially concerning because of the increasing number of Americans dropping out of the workforce. As has been the case throughout 2013, the economic recovery continues to lag behind past recoveries, particularly as it relates to job creation, economic growth, labor force participation, and wage growth.
Facts You Need to Know:
- The unemployment rate remained essentially unchanged from September, increasing slightly from 7.2 percent to 7.3 percent. The number of unemployed persons increased slightly by 170,000 persons in October.
- Long-term unemployment (those unemployed for more than 27 weeks) decreased slightly from 4.15 million to approximately 4.06 million Americans in the month of October.
- The Labor Force Participation Rate, which identifies the number of people who are active participants in the labor force (relative to the total population), dropped to 62.8 percent in October from 63.2 percent in September, its lowest level since March 1978. The Employment-Population Ratio, a metric that establishes the raw employment rate, dropped from 58.6 percent to 58.3 percent in October. The employment population ratio is down 0.4 percent since last year, and is 2.3 percent lower than it was when President Obama took office.
Why Does a “Pro-Growth” Agenda Matter?
- Labor force participation dropped by 0.4 percent, leaving the United States at its lowest participation rate since March 1978. With the number of long-term unemployed decreasing in the month of October, the contraction in the labor force can be attributed to a large number of Americans simply giving up looking for work.
- Moreover, the number of working age Americans who are not participating in the labor force stood at 91.54 million people in October, an increase of 932,000 since September and 3.13 million since October, 2012. The poor job market reflects much of this increase.
- Finally, the employment population ratio decrease to 58.3 percent reflects the reluctance of Americans to reenter the workforce and the belief that they are better off without employment. A higher employment-population ratio, facilitated by a pro-growth agenda, strengthens GDP per capita, leading to improvements in consumer spending, and greater growth.
- Put in terms of Real GDP Growth, the Joint Economic Committee (JEC) estimates that the current recovery is lagging behind the 17-quarter average of 18.7 percent. Put in dollar terms, the growth gap between the current recovery and average recoveries is $1.3 trillion. Lower GDP growth means less private sector job creation, less disposable income, and lower tax revenue for the federal government. Greater economic growth will organically increase the tax base, improve private sector job creation, and increase the rate of disposable income growth for all Americans.
- Americans deserve an agenda that focuses on increasing the size of the labor force and promoting economic growth to strengthen our nation’s long-term economic success.
 BLS, Historical Tables, Labor Force Participation Rate