Although the unemployment rate has fallen drastically since the start of the recession, it is clear that there is still a lot of work to be done on the economy. One of the reasons that the unemployment rate is so much lower is that the labor participation rate is lower as well. This is not only because of people temporarily stopping their job searches but also because baby boomers are beginning to retire and some people have been unemployed so long that they have permanently stopped looking for jobs. As workers are unemployed longer, recruiters stop looking to them as possible new hires. However, paying attention the unemployment rate is still important. Economists are now saying that the labor supply in America will never return to what it once was. This means that our economy is operating much closer to its potential and that we are using more of the available labor and capital. That being said, it is important to get long-term out of work employees back into the labor market.
http://www.economist.com/news/finance-and-economics/21596529-americas-labour-market-has-suffered-permanent-harm-closing-gap
http://www.economist.com/news/finance-and-economics/21596529-americas-labour-market-has-suffered-permanent-harm-closing-gap
3 comments:
I think the outlook that the unemployment will never be as low as it once was is a pessimistic and short-cited outlook. Right now, technological growth is outpacing the skills of labor, but history shows that technological advancement creates jobs in the long run.
I think the lower unemployment rate can be misleading without additional statistics. The U.S economy is said to being recovering, the unemployment rate is one of the most important criteria used to assess the recovery of the economy. However, the job growth is low, and the lower unemployment, as explained in the article, is caused by the labor force. To me, it is neither a positive nor negative sign.
The lower unemployment rate would hopefully increase the consumer confidence rating, but the CC level decreased in March. It is always important to consider more than just a few ratings in determining the strength of the economy.
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