One quick glance at the chart above immediately calls into question the U-3 unemployment rate's accuracy and relevancy.  Why, after the 2008 financial crisis, did the unemployment rate NOT hit a new post-WWII high?  After all, the 2008 global recession was the worst since The Great Depression, when the entire global financial system almost crashed, Lehman Brothers and Bear Stearns disappeared, the real estate market collapsed, and stocks lost over half their value.

 

Many factors, including the increase in "discouraged workers" and part-time employment, and the declining workforce participation rate, are to blame for the demise of U-3.  Whatever reason(s) you choose, make no mistake: The official unemployment rate is a mirage.

 

  

While newspaper headlines quote U-3 unemployment figures, many economists point to the unemployment rate known as U-6 for a more accurate measure.  Unlike the U-3 unemployment rate, U-6 actually takes into consideration "marginally attached workers" plus those people who needed full-time work, but could only find part-time.

 

U-6 data above paints a more realistic picture of full-time employment.  Unfortunately, the current U-6 rate is still higher than the peak level after the 2001 recession.

 

  

The St. Louis Federal Reserve Bank puts out some great data in conjunction with the Organization for Economic Co-operation and Development (OECD).  The chart above paints a realistic picture of unemployment as it focuses only on 25-54 year olds, the prime working ages for most adults.  Again, we can see a similar pattern to the previous U-6 chart, except we need an even larger drop to get to the best (lowest) levels of unemployment. 

 

 

By narrowing the data set even further and looking only at 25-54 year old men, we see a continuation of the unemployment patterns from the previous two charts.  This chart may be more historically relevant, however, because by only including men, the data is not being skewed by the massive influx of female workers in the 1970s-1980s.  That important change in the demographic make-up of the work force makes data since the 1970s-80s much harder to analyze.

 

Be that as it may, when looking at the above chart, two things stand out:

1. 25-54 year old male unemployment is not down to the worst level of the early 1980s.
    
2. Structural problems are emerging: the recovery peak after each recession is producing a higher unemployment rate than the previous recovery peak.  In other words, unemployment is dropping to "higher lows" during each economic recovery cycle.

These are monumental problems for our economy.

 

 

When a smaller percentage of the population is fully-employed, it stands to reason that a larger percentage of the population is receiving government benefits.  This 35-year chart shows that after ebbing and flowing during each business cycle, the percentage of working age Americans accepting what was previously known as food stamps has now skyrocketed to unprecedented heights.  The use of the Supplemental Nutrition Assistance Program (SNAP) went from a modern day low of 8% of the working age population in 2000 to over 18% today.  That's around 50 million people!

 

Normal population growth patterns are swamping our current economy's ability to lower real unemployment.

 

When the BLS announces each month's employment figures, the media typically focus on the number of new jobs created during the month.  Much fanfare has been given in the news during recent months, primarily because the new jobs figures have been north of 200,000+ jobs for 11 months in a row!  While those numbers are very good news indeed, there is something else at play here that is rarely mentioned: population growth.

 

 

The above chart shows job growth minus population growth.  Do you see a problem?  Ask yourself this question: which is more impressive?  Adding 200,000 jobs in a month when we have a working-age population of 167 million people or when we have a working-age population of 250 million people?  That simple math quiz is the difference between 1980 and 2014.  Our country has added 83 million working-age people to our population since 1980, including over 37 million just since the year 2000.

 

What is striking to see is the difference between the 1990's recession/recovery employment differential pattern and what has taken place since 2000.  Unfortunately, the 1990s employment differential pattern has not repeated itself at any time during the last 15 years.  Instead, what you see is that whatever job growth we experienced since 2003 and especially since 2010 has been completely overwhelmed by the additional monthly population growth!  We're merely treading water.  We're like a soon to be exhausted swimmer fighting in vain against the rip current.

 

  

Much like swimming against a rip current in the ocean, your progress (and survival!) can't be gauged by how many strokes you are taking per minute.  Rather, your progress is measured by your ability to overcome the rip current's force to pull you further away from shore (Tip: If stuck in a rip-current, swim out of the current first, then towards shore).  Such is the plight of the monthly jobs report.  The real strength of the numbers over time is in direct response to the ability to overcome population growth.

 

We are not creating enough high-paying jobs to sustain our economy.

 

We've been focusing on the quantity of jobs created, but what about the quality?  Are the 200,000+ jobs being added each month high-paying career jobs or low-paying jobs?  To answer that important question, we dug deep into the data and found exactly what we were afraid of.

 

 

Comparing job growth in the top 10 and 20 highest paying job categories vs. the bottom 10 and 20, we see a large contrast.  For example, the top 20 highest paying job categories lost over 250,000 jobs since 2000, while the lowest paying 20 job categories gained over 2,000,000 jobs!  This is not how to build a strong economy.

 

Obviously, adding jobs is preferred to losing jobs.  But next time you hear about the string of 200,000+ jobs being added each month, ask yourself, what does that actually mean?  

 

Are we making our way to shore or just being pulled further out to sea?