The U.S. Labor Market Isn’t all That Healthy
Underemployment is a problem that isn’t measured well by the official data.
Bloomberg, July 1, 2019
By most measures, the U.S. is at or very close to full employment. The unemployment rate today is 3.6%, the lowest since 1969.
And yet, there is a sense that something is amiss.
Consider the following data points. In a typical full employment economy, this is what you would expect to see:
— Robust wage growth;
— Rising consumer confidence;
— Record employment-to-population;
— Longer workweeks and more overtime;
— CFO survey shows confidence about the future;
— Rising quit rates as employees aggressively change jobs;
— Low and falling levels of people marginally attached to labor force;
— High and rising consumer spending;
— More household formations;
— Housing sales (for new and existing homes) are strong;
In many case, these measures are not where you might expect them to be in the 10th year of what is now the longest economic expansion in postwar history. This isn’t to suggest that these are portents of a tired economy beginning to run out of fuel, but rather, indicators of something more insidious — larger, structural failures within the U.S. economy . . .