White House economic adviser Alan Krueger greeted last Friday's employment numbers with optimism, noting that they suggest "the recovery that began in mid-2009 is gaining traction." His sanguine assessment echoes previous Obama administration claims in 2010, 2011 and 2012 that the recovery was just around the corner. Could it finally be for real?
To be sure, the report's top line contained signs of hope, such as better-than-expected net job gains and a modest tick downward in the unemployment rate. But this bit of good news was tempered by the fact that more Americans gave up looking for work and dropped out of the labor force last month (296,000) than took new jobs (260,000).
And at 63.5 percent, the share of Americans participating in the labor force -- that is, either working or looking for work -- has fallen again to last year's low, which had not been seen since the Carter era. What's more, this ominous trend obscures the labor market's true condition because the unemployment rate goes down every time someone stops trying to find work.
Unfortunately, there is worse news than this. One of the most important but least-covered stories of the 2012 election was the labor market depression currently being experienced by Americans between the ages of 25 and 54. These are the Americans in the midst of making something of themselves -- building careers and lives, reaching their peak earning years, forming families, and providing the economy with vitality and innovative thinking. Sadly, they are doing less of these things on aggregate in the Obama era.
It was dispiriting enough that 5.2 million Americans aged 25 to 54 lost their jobs in the Great Recession, which ran from December 2007 through June 2009. Far more unsettling is the fact that in the time since -- after three years and nine months of the Obama "recovery," during which millions of lost jobs were restored -- not a single net job has been regained in this age group. In fact, the number of mid-career adults working today is still lower than it was not only in June 2009 but also in May 1997, despite a 20 percent increase in U.S. population over the last 16 years. And the number of Americans in this age group neither working nor seeking work has surged in recent months to a new all-time high, after falling sharply last fall and creating new false hopes.
Nearly all of the jobs regained in the Obama recovery have gone to the over-55 age group. The "gray jobs" recovery has emerged through a combination of workers aging and near-retirees hanging on longer than they once did. This suggests that America is losing a generation of workers -- millions with blank years in their resumes that make them less employable. In the long term, their lack of job experience will diminish their value as replacements for the growing number of older and highly experienced workers who will eventually retire. In the longer term, today's lost young adults threaten to become impoverished wards of the state in retirement.
This reality underscores the inefficacy of the 2009 stimulus package. If it accomplished anything, it appears only to have allowed employers to hang on to their oldest and most experienced employees. The continued stagnation also demonstrates the need for President Obama to put job creation ahead of ideological objectives such as the abolition of coal, the establishment of futile renewable energy projects and tax changes whose primary purpose is to punish someone rather than raise revenue. Stop killing the job market, and it might just come back to life.