Take a moment for an overlooked economic indicator: the employment rate.
The government said Friday that 58.5% of Americans over the age of 16 had jobs in March.
This employment rate has remained remarkably stable since 2010, never higher than 58.7% nor lower than 58.2%. Job creation has essentially kept pace with population growth. Nothing more. The share of Americans with jobs is still about 5 percentage points lower than it was before the recession.
It may seem surprising. After all, the unemployment rate – the labor market indicator that gets all the attention – fell from 9.8% to 7.6% over the same three-year period.
But that’s only surprising because people tend to treat the unemployment rate as an inversion of the employment rate. In fact, the government only counts people as unemployed if they are actively looking for a job. A majority of the unemployed fall into a third category: those who do not work and do not seek.
It is this third category, which in March comprised about 36.7% of all American adults, that has increased as official unemployment has fallen.
Some of these people are retired or disabled. Some are stay-at-home parents. And some of them have stopped looking for work because they have lost all hope of finding any. The government estimates the number of members in each of these groups. It is clear, for example, that a growing share of Americans are elderly. But it’s impossible to know how many 66-year-olds would return to work if jobs were available, or how many parents would put their children in daycare if they could earn enough to cover the costs.
The unemployment rate treats all of these people as invisible. The employment rate treats them all as potential workers. The truth surely lies between the two: it has become a little, but not much, easier to find work if you want it.
Corrected: April 6, 2013
An earlier version of this article misrepresented the percentage of American adults who are neither working nor looking for work. In March, the figure was around 36.7%, not 34%.