Last year, we pointed out that there would be little to no wage inflation because there were still 8 million American workers missing from the labor force. That was when the unemployment rate was at 4.1% as of February 2018. Today, as of June 2019, the unemployment rate is even lower still - a decades low 3.7% and there is still no wage inflation.
Yes, wages are rising but at less than a measly $0.75 gain a year while the inflation rate has been hovering at around 2% for the past ten years.
The reason for this? Labor Force Participation Rates (LFPR) and Employment-Population Ratios (EPR) have yet to recover their Pre-Recession peak.
If the June 2019 LFPR had reached their pre-recession peak of 66.0%, the US
would have roughly 8.1 million more workers in the labor force than it has
now. Likewise, if the June 2019 EPR had reached their pre-recession peak of 62.9%, the US would have roughly 6.0 million more people employed than it has now.
This means that the millions of people who disappeared from the labor force during the Great Recession are starting to reappear and get jobs and that has held wages down. The gains in LFPR and EPR have been very gradual, and at this rate, it may take years, if not decades for the economy to finally recover.
There Are Still Almost 8 Million Missing American Workers
No comments:
Post a Comment