It appears there is good news on the unemployment front with California unemployment down to 7.8 percent and the national rate reduced to 6.3 percent. However, the unemployment rate is derived from the labor participation rate, not the actual working-age population.
Unfortunately, most of the media reported only half of the story. The drop in unemployment corresponds with a significant drop in labor participation — 3 percent in the past five years — following nearly 25 years at a steady 65 percent to 67 percent. It is now back to a rate last seen in 1978.
Much of the drop in unemployment is not a result of job growth, rather it is a result of the working-age population permanently leaving the labor market. This drag on the economy needs to be analyzed just as much as the poor employment options your report covered. Unfortunately, each person who permanently leaves the labor force for whatever reason is one less person pushing our entire economy forward.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.