Slate Column, With Unemployment Rate at 3.9 Percent: It's 'Meaningless'

May 6th, 2018 4:46 PM

You had to figure that a left-leaning journalist somewhere would denigrate Friday's news that the nation's seasonally adjusted unemployment rate fell below 4 percent for the first time since 2000.

Jordan Weissmann, in a column beginning with a headlined contention that "The Unemployment Rate Is Meaningless," came through.

Weissmann's widely-shared concern is that wages aren't rising quickly, indicating that the country isn't close enough to full employment to create wage pressures (h/t Instapundit):


One response to this, especially given a tweet Weissmann cited which noted that non-managers' wages have only increased by 2.6 percent, would be to ask: How much impact has illegal immigration had, especially on non-managers? Weissmann predictably didn't address the topic.

Faster wage growth typically hasn't appeared until there has been a period of relatively strong economic growth. By historical standards, there hasn't been strong annual growth since the last recession ended, though there are some recent signs that the spell might finally be breaking. Hourly wage growth of 4 percent or more didn't occur during the last decade until 2006, after economic growth in 2004 and 2005 averaged over 3.5 percent. Similarly, it didn't consistently top 4 percent during the 1990s until late 1997, after the economy hit full stride in the second quarter of 1996.

Weissmann wants to focus on something else:


Sure, Jordan. Let's "forget" sub-4 percent unemployment, record-low black unemployment of 6.6. percent, and the low Hispanic rate of 4.8 percent. Would Weissmann would be telling us to "forget" these things if a Democrat occupied the White House?

Weissmann's has a point about working-age participation. But why is it a lingering problem?

Here's why:


It's not difficult to see why "The labor market is still only about four-fifths recovered from the recession." It's because, after falling off a cliff during the recession, the 25-54 participation metric was stuck at an intolerable 75 percent for over two years after it officially ended (September 2009 through October 2011) — a level not seen since the early 1980s, when the workforce had a far lower percentage of women.

Early Obama administration policies during this period are primarily to blame for this. They included a stimulus plan which didn't stimulate anything except misery and additional dependency; the passage of Obamacare; and unprecedented regulatory over-reach and hostility, which continued to the administration's bitter end.

All of this led to a shocking, unprecedented number of Americans who were cut off from employment:


Picky employers tragically — but rationally — preferred to hire those who were employed elsewhere or only recently became unemployed over the long-term unemployed.

The graph's red-arrowed line shows what would likely have happened if the damage the Obama administration's policies wrought hadn't occurred. Instead of four-fifths of the way back, the participation rate for this key working-age group would be virtually all the way back — and wage pressures would be significantly greater.

We should thank Jordan Weissmann for making this clear, though inadvertently. He can now focus on his recent favorite topic: sex redistribution.

Cross-posted at