A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.



Immigration, Women, Key to Job Growth Goals

With a goal of adding 25 million new jobs in eight years, the math does not work unless we have a surge in labor force participation, or in immigration. That math gets even tougher if the current rate of immigration is reduced.

The population is growing much slower than in 1950s, ‘60s and ‘70s, which was the post World War II baby boom.

Within that slower growing population the so-called “labor force” consists of everyone who either has a job or is looking for one. Young people in school are not included, nor are older retired people, and a significant reason for lower labor force participation is that the population is aging.
The labor force participation rate has been going in the wrong direction largely because of a shrinking percentage of women participating in the labor force, reversing the 20th century uptrend.

In early 1950s almost all men and just 1/3 of women were in the labor force. Since then men’s participation has been falling for nearly seven decades to 69% now. But women’s participation in the labor force rose steeply until the end of the 20th century to over 60%, nearly closing the gap with men. And then, it too turned down, and is now under 57% -- we call this the end of convergence, which has taken away a major pillar of labor force growth, which helps define the limits to job growth.

To put things in perspective, even if women’s labor force participation returned to its all-time record highs, we would need male participation back to what it was during the Kennedy administration (1963), reversing more than half a century of decline.
Absent the demographics the U.S. used to enjoy in the 1950s, 1960s and 1970s – and without a dramatic surge in immigration or the number of women joining the labor force – it will be virtually impossible for any president to add 25 million jobs in the next eight years.

And then there’s the Purple Squirrel problem: for years the number of job openings has trended higher faster than hiring, so there are more job openings than people being hired. Meaning that employers have become increasingly choosy, hunting for the so-called Purple Squirrels – people with the perfect combination of skills, education and experience, who will work for peanuts.

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