Employment, Big Red Car – what about employment?

Dear reader, US employment and unemployment are both headed in the right direction, but there is a concern we need to discuss.

We need to discuss the Labor Force Participation Rate. Do you know what that means?

The LFPR is the percentage of folks aged 16-64 (the labor force) who are currently employed or seeking work.

Here is a picture of what that looks like today with our 3.8% unemployment rate. Notice, in particular, the comparison between our current LFPR/unemployment rate and the Jan-Apr 2000 all time high LFPR. Therein lies the story.


Credit Doug Short over at Advisor Perspectives for this great chart. Read his stuff at dshort.com.

Employment data

Unemployment is very good. The economy is doing well, but we need to have two things happen:

 1. Scarcity of workers (the corollary of low unemployment) needs to tease employers to increase wages.

 2. We need to increase the number of people in the labor force meaning we need to get those who have given up – no longer seeking employment – to rejoin the labor force and look for work.

Until these two things happen, there will still be room for improvement even though low unemployment is signalling a sound economy.

Raise wages while drawing more workers back to the labor force.

But, hey, what the Hell do I really know anyway? I’m just an unemployed Big Red Car, y’all.