A new study reports that the labor market is “moving in two directions at the same time.” The latest figures on employment show that the labor force is smaller, and the participation rate is higher. So while unemployment rates have decreased, somehow a large number of workers (about 750,000) have disappeared. The demographic figures predicted an increase of 4.1 million. The missing workers are those who either never entered the job market, that is young people who have yet to obtain their first job, or people who dropped out of the labor market, presumably to reemerge when times are better.
The author of the study points out that these missing workers affect the unemployment rate in a big way; if only half were counted, the unemployment rate overall would be 10.5%, rather than 9%. The telling statistic is this: “Aside from today’s muddled picture, one thing is crystal clear: the U.S. labor market started 2011 with half a million fewer jobs than it had 11 years ago in January 2000.”
The following week, unemployment claims were back up dramatically.