Why Many Aren't Celebrating Low Unemployment

http://www.manufacturing.net/news/2014/11/why-many-arent-celebrating-low-unemployment?et_cid=4256286&et_rid=54679148&type=cta


But the jobs report contains clues to why many voters shrugged off those positive trends.

Consider wages. Workers' pay usually outpaces inflation once the unemployment rate dips beneath 6 percent. That's because when fewer people need to look for jobs, employers must raise pay to attract the most desirable among them.

Even with 5.8 percent unemployment and even though more than five years have passed since the Great Recession officially ended, this phenomenon has yet to take hold. Most workers' pay is barely keeping up with historically low inflation.

"People aren't looking at the statistical aggregates," said Bill Galston, a senior fellow at the Brookings Institution. "They care about their standard of living, and most Americans think their standard of living has declined."

Look, too, at the percentage of adults either working or searching for work. It's a measure called labor force participation. The government counts people without jobs as unemployed only if they're seeking work. If more people stop looking, labor force participation falls.

At 62.8 percent, the U.S. participation rate hasn't budged over the past 12 months. And it's down a sharp 3.6 percentage points from 2007. That means a lower proportion of Americans are engaged in the job market and benefiting from the economic upswing.