As the U.S. economy limps along into its fourth year of a tepid recovery, its job creation machine remains badly broken.
Friday’s monthly employment report was better than many forecasters were expecting, showing a relatively strong gain of 163,000 new jobs in July. But the rise of the jobless rate -– up a tenth of a point to 8.3 percent — was a painful reminder of how many sidelined workers have been left behind by the weakest rebound in six decades.
As the subpar recovery drags on and growth appears to be, in the words of Federal Reserve Chairman Ben Bernanke, “stuck in the mud,” the weak pace of hiring may be doing lasting damage
“You destroy human capital, and the problem is it’s difficult for those individuals to come back,” said Ed Lazear, a Stanford economist who served as adviser to President George W. Bush. “People who are in their mid- to later 50s — who would otherwise be working for another 10 years or so — now may simply decide to stay out of the labor market. That’s a lot of lost manpower and lost productivity.”
Though the headline jobless rate that attracts the most attention in the media has been trending lower from a peak of 10 percent in 2009, that doesn’t capture the large group of Americans who have given up looking for work.
The government isn’t hiding the data. The Bureau of Labor Statistics has been tracking unemployment as a percent of the population, for example, since 1948. By that broadest measure, some 41 percent of the total population over 16 is not working — a rate that has barely budged since the recession ended in June 2009.