The Beginnings of Wage Inflation

Last year, we estimated that pointed out that there were still 7.4 million workers missing from the labor force. The presence of so many missing workers would dampen wage growth for some time to come. Today, the number of missing workers is down slightly to 6.8 million workers as of January 2020.

And, true enough, wage growth has remained rather subdued given the low official unemployment rate of 3.6% as of January 2020.

But certain sectors of the labor market are starting to tighten. For instance, the prime age (25 to 54 years old) working group is now reflecting a shortage of workers of 191 thousand people.

This indicates that wages for this age group could tighten in the not too distant future.

The tightness of the prime working age group is not shared equally among the sexes. The labor market for Prime Age Women Workers is very tight, with an estimated shortage of almost 1 million women as of January 2020.

For men, it is an altogether a different story. There are still around 800K Prime Age men missing from the labor market..

This gap for Prime Age men is being filled very slowly, only a few thousand a month. But once that gap is filled, wages should start rising up.

Related Posts: Why There Is Still No Wage Inflation: There are 8.1 Million Missing American Workers

Unemployment is Low But Wage Inflation is Low Too. Which States Have the Tightest Labor Markets?

Last month, the unemployment rate was an astounding 3.7% - a rate not seen since September 1969.

But for most of the last decade, wage inflation has been low to almost non-existent. Only recently have wages started to creep up.

One reason? Both the Civilian Labor Force Participation Rates (LFPR) and Civilian Employment to Population Ratios (EPR) have yet to reach their pre-recession peak in 2007 and their absolute peak in 2000, during the height of the dotcom bubble.

The gaps are substantial, involving millions of missing workers. For instance, if last month's LFPR were 65.70% (2007 pre-recession peak) instead of an actual 63.20%, there would be 6.5 million more workers counted in the labor force today.

If we had posted an EPR of 63.00% (2007 peak) instead of the current 60.90%, there would be 5.6 million more workers employed today.

Instead, all those workers have gone missing from the labor force. One reason why wage inflation has not been stronger is that all these missing workers are slowly starting to come back to the labor force and kept a lid on wage inflation.

But that is starting to change. Some states have reached, if not surpassed, their pre-recession LFPRs and EPRs and are starting to experience a shortage of workers.Where are those shortages? DC and Massachussets come to mind (in green). Thirteen other states (in yellow) are getting close, with less than 2% of their civilian non-institutional populations (CINP) labeled as missing. Sadly, five states (in red) have more than 5% of their workers categorized as missing from the labor force.

In terms of EPR, DC and MA have actual shortages (in green) while six other states have less than 2% of their CINPs categorized as missing (in yellow). Seven states have more than 5% of their CINPs categorized as missing.

If you add the percentage of missing workers to the state's unemployment rate, we get a closer picture of where the true unemployment rates lie. Again, DC and MA (in green) have very low true unemployment rates, while four other states (in yellow) have true unemployment rates of less than 5%. Seven states (in red) have true unemployment rates of 12% or more of their CINPs.

Why There Is Still No Wage Inflation: There are 8.1 Million Missing American Workers

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

There Are Still Almost 8 Million Missing American Workers

Last time we talked about this, there were 7.95 million missing American workers, if we used the Pre-Recession 2007 Labor Force Participation Rate (LFPR) of 65.70%.

As of August 2018, that figure hasn't changed much. There are still 7.77 million missing American workers, if we used the 2007 LFPR. The LFPR now stands at 62.70% as of August 2018, just 0.10% higher than the LFPR at the end of 2017.

Using the Pre-Recession 2007 Civilian Employment Population Ratio (EPR) of 63.00% leaves similar results: 7.04 million missing American workers. The EPR now stands at 60.30% as of August 2018, 0.70% higher than the EPR at the end of 2017.

It will take a long time for this slack to be reduced. The LFPR only bottomed out to 62.40% in 2015 and has climbed only 0.10% every year since then. Thus, it will take a staggering 31 years to cover the 3.10% gap in the LFPR.

 Therefore the US will continue to experience little to no wage inflation in the near future.

Related: Why There Will Be Little to No Wage Inflation: There are 8 Million Missing American Workers

Why There Will Be Little to No Wage Inflation: There are 8 Million Missing American Workers

On February 2, 2018, the US stock market began a series of convulsions that culminated in a 10.28% decline in the S&P 500 Index just one week later. The cause? A reported 2.9% year-on-year wage growth in January 2018, the highest since June 2009. This news sparked fears of rapid rise in inflation and interest rates. Inflation fears only subsided when it was revealed that wage growth for the lower paid 80% of the workforce, those with production and non-managerial jobs, was only 2.4%. Thus, the bulk of the wage increases mostly benefited the supervisory classes, i.e. the higher paid-workers.

One reason for the market's hissy fit? Tight labor conditions, as indicated by February 2018's 4.1% unemployment rate, the lowest it's been in almost two decades.

That 4.1% unemployment rate is deceptive because both the civilian labor force participation rate (LFPR) and the civilian employment population ratio (EPR) have gone down substantially. Both indicators are nowhere near their pre-recession peak in 2007 and are even further away from their all-time highs during the peak of the tech bubble in 2000.

Some experts have blamed the declines in LFPR as structural, i.e. due to an aging work force. However, the LFPRs for people past the prime working age (55 years and over) has largely held up since the recession.

In fact, the LFPR for those truly at the retirement age (65 years and older) has only gone up.

This indicates that there is a lot of slack in the market for labor. A lot of slack.

If the 2017 LFPR had reached their pre-recession peak of 65.7%, the US would have roughly 8 million more workers in the labor force than it has now.

If the 2017 EPR had reached their pre-recession peak of 59.40%, the US would have roughly 7.3 million more people employed than it has now.

It will take a long time for this slack to be reduced. The LFPR only bottomed out to 62.40% in 2015 and has climbed only 0.10% every year since then. Thus, it will take a staggering 31 years to cover the 3.10% gap in the LFPR. The 1.80% gap in EPRs will be covered in a much shorter time frame: only 4.5 years, because the annual gain in EPR is a more robust 0.40%.

Therefore the US is nowhere near wage inflation.

Great Depression vs. Great Recession: Unemployment - Updated March 2016

The reported unemployment rate during the Great Depression was significantly higher than the reported unemployment rates of the Great Recession.

But are the two rates comparable? Before 1938, children were a significant part of the labor force.  In 1900, children younger than sixteen made up as much as eighteen percent of the labor force.  It was only when the Fair Labor Standards Act of 1938 became law that children younger than sixteen were barred from working in manufacturing and mining but not agriculture.

To make the numbers more comparable, it is better to get the ratio of Employment to the Total Population (which includes children). When we do this, the two measures are not so far apart.  In 1929, the year "0" for the Great Depression, 54.41% of the total population was employed.  By 1933, year "4", only 41.97% of the population was employed. But the rise in employment was dramatic.  Four years later, 47.63% of the population was employed, almost six percentage points higher. The employment momentum only stalled when the tax hikes of 1937 induced another recession in 1938 and new child labor laws barred children from the labor force.  If the momentum had continued, the employment ratio would have recovered in less than five years.




In 2007, the year "0" of the Great Recession, 48.38% of the population was employed.   Four years later, only 44.82% of the population was employed, a drop of less than 4 percentage points.  By March 2016 or four years after the Great Recession bottomed out, only 46.70% of the population is employed, an increase of only 2.01% percentage points.  The growth rate of employment was less than a third that of the Great Depression.  At this rate, it will take four more years or 2020 before employment recovers to that of Year "0".

Great Depression vs. Great Recession


Sources: www.worldbank.org, www.bea.gov, www.bls.gov,  Reinhart and Rogoff, "This Time is Different"

Great Depression vs. Great Recession: Unemployment - Updated February 2016

The reported unemployment rate during the Great Depression was significantly higher than the reported unemployment rates of the Great Recession.

But are the two rates comparable? Before 1938, children were a significant part of the labor force.  In 1900, children younger than sixteen made up as much as eighteen percent of the labor force.  It was only when the Fair Labor Standards Act of 1938 became law that children younger than sixteen were barred from working in manufacturing and mining but not agriculture.

To make the numbers more comparable, it is better to get the ratio of Employment to the Total Population (which includes children). When we do this, the two measures are not so far apart.  In 1929, the year "0" for the Great Depression, 54.41% of the total population was employed.  By 1933, year "4", only 41.97% of the population was employed. But the rise in employment was dramatic.  Four years later, 47.63% of the population was employed, almost six percentage points higher. The employment momentum only stalled when the tax hikes of 1937 induced another recession in 1938 and new child labor laws barred children from the labor force.  If the momentum had continued, the employment ratio would have recovered in less than five years.



In 2007, the year "0" of the Great Recession, 48.38% of the population was employed.   Four years later, only 44.82% of the population was employed, a drop of less than 4 percentage points.  By February 2016 or four years after the Great Recession bottomed out, only 46.76% of the population is employed, an increase of only 2.07% percentage points.  The growth rate of employment was less than a third that of the Great Depression.  At this rate, it will take four more years or 2020 before employment recovers to that of Year "0".

Great Depression vs. Great Recession


Source: www.worldbank.org, www.bea.gov, www.bls.gov,  Reinhart and Rogoff, "This Time is Different"

Great Depression vs. Great Recession: Unemployment - Updated January 2016

The reported unemployment rate during the Great Depression was significantly higher than the reported unemployment rates of the Great Recession.

But are the two rates comparable? Before 1938, children were a significant part of the labor force.  In 1900, children younger than sixteen made up as much as eighteen percent of the labor force.  It was only when the Fair Labor Standards Act of 1938 became law that children younger than sixteen were barred from working in manufacturing and mining but not agriculture.

To make the numbers more comparable, it is better to get the ratio of Employment to the Total Population (which includes children). When we do this, the two measures are not so far apart.  In 1929, the year "0" for the Great Depression, 54.41% of the total population was employed.  By 1933, year "4", only 41.97% of the population was employed. But the rise in employment was dramatic.  Four years later, 47.63% of the population was employed, almost six percentage points higher. The employment momentum only stalled when the tax hikes of 1937 induced another recession in 1938 and new child labor laws barred children from the labor force.  If the momentum had continued, the employment ratio would have recovered in less than five years.


In 2007, the year "0" of the Great Recession, 48.38% of the population was employed.   Four years later, only 44.82% of the population was employed, a drop of less than 4 percentage points.  By January 2016 or four years after the Great Recession bottomed out, only 46.62% of the population is employed, an increase of only 1.93% percentage points.  The growth rate of employment was less than a third that of the Great Depression.  At this rate, it will take five more years or 2021 before employment recovers to that of Year "0".

Great Depression vs. Great Recession

Source: www.worldbank.org, www.bea.gov, Reinhart and Rogoff, "This Time is Different"

Great Depression vs. Great Recession: Unemployment - Updated April 2015

The reported unemployment rate during the Great Depression was significantly higher than the reported unemployment rates of the Great Recession. 

But are the two rates comparable? Before 1938, children were a significant part of the labor force.  In 1900, children younger than sixteen made up as much as eighteen percent of the labor force.  It was only when the Fair Labor Standards Act of 1938 became law that children younger than sixteen were barred from working in manufacturing and mining but not agriculture.

To make the numbers more comparable, it is better to get the ratio of Employment to the Total Population (which includes children). When we do this, the two measures are not so far apart.  In 1929, the year "0" for the Great Depression, 54.41% of the total population was employed.  By 1933, year "4", only 41.97% of the population was employed. But the rise in employment was dramatic.  Four years later, 47.63% of the population was employed, almost six percentage points higher. The employment momentum only stalled when the tax hikes of 1937 induced another recession in 1938 and new child labor laws barred children from the labor force.  If the momentum had continued, the employment ratio would have recovered in less than five years.


In 2007, the year "0" of the Great Recession, 48.42% of the population was employed.   Four years later, only 44.89% of the population was employed, a drop of less than 4 percentage points.  By April 2015, a little over three years later, only 46.27% of the population is employed, an increase of only 1.38% percentage points.  The growth rate of employment was less than a fourth that of the Great Depression.  At this rate, it will take six more years before employment recovers to that of Year "0".

"Great Depression vs. Great Recession"

Source: www.worldbank.org, www.bea.gov, Reinhart and Rogoff, "This Time is Different"

Great Depression vs. Great Recession: Unemployment

The reported unemployment rate during the Great Depression was significantly higher than the reported unemployment rates of the Great Recession.

But are the two rates comparable? Before 1938, children were a significant part of the labor force.  In 1900, children younger than sixteen made up as much as eighteen percent of the labor force.  It was only when the Fair Labor Standards Act of 1938 became law that children younger than sixteen were barred from working in manufacturing and mining but not agriculture.

To make the numbers more comparable, it is better to get the ratio of Employment to the Total Population (which includes children). When we do this, the two measures are not so far apart.  In 1929, the year "0" for the Great Depression, 54.41% of the total population was employed.  By 1933, year "4", only 41.97% of the population was employed. But the rise in employment was dramatic.  Four years later, 47.63% of the population was employed, almost six percentage points higher. The employment momentum only stalled when the tax hikes of 1937 induced another recession in 1938 and new child labor laws barred children from the labor force.  If the momentum had continued, the employment ratio would have recovered in less than five years.

In 2007, the year "0" of the Great Recession, 48.42% of the population was employed.   Four years later, only 44.89% of the population was employed, a drop of less than 4 percentage points.  By October 2014, roughly three years later, only 46.14% of the population is employed, an increase of only 1.25% percentage points.  The growth rate of employment was less than a fourth that of the Great Depression.  At this rate, it will take six more years before employment recovers to that of Year "0".

"Great Depression vs. Great Recession"


Source: www.worldbank.org, www.bea.gov, Reinhart and Rogoff, "This Time is Different"

Charting the US Jobs Recovery - Washington State, DelMarVa + DC Edition - August 2014

Most media discussions on the US Jobs Recovery focus on just one number - the headline Unemployment Rate.  To add color to the first number, financial pundits like to add a second number - the Labor Force Participation Rate.  Both are intertwined and affect each other.  But in the aftermath of the Great Recession, there is a third, much more meaningful number that is almost never discussed - the Employment to Population Ratio.

Definitions

Now, what are these numbers?  Many people will give you a technical description that can be hard to grasp and make your eyes glaze over the minute you hear them.  But the reality is simple.

The Unemployment Rate is the percentage of:

PEOPLE WHO WANT  A JOB BUT DON'T HAVE ONE (Unemployed)/
LABOR FORCE

The Labor Force is:

PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)

The Labor Force Participation Rate is percentage of:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)]/
WORKING AGE PEOPLE

Working Age People are generally defined as PEOPLE WHO ARE 16 YEARS AND OLDER.  In reality, they are:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed) + PEOPLE WHO ARE NOT IN THE LABOR FORCE (Not in Labor Force)]

The category PEOPLE WHO ARE NOT IN THE LABOR FORCE includes:


PEOPLE WHO ARE IN THE MILITARY
PEOPLE WHO ARE INSTITUTIONALIZED
PEOPLE WHO ARE STUDENTS
PEOPLE WHO ARE HOMEMAKERS
PEOPLE WHO ARE RETIRED
PEOPLE WHO ARE MARGINALLY ATTACHED TO LABOR FORCE (INCLUDING DISCOURAGED WORKERS)


The Employment to Population Ratio is the percentage of:

PEOPLE WHO WANT AND HAVE JOBS/
WORKING AGE PEOPLE

In other words, PEOPLE WHO WANT AND HAVE JOBS/
[PEOPLE WHO WANT AND HAVE JOBS + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE + PEOPLE WHO ARE NOT IN THE LABOR FORCE


How does this work out?

According to this chart from the popular financial blog, Calculated Risk, the US, in May 2014, gained back all the jobs lost since the Great Recession started in November 2007.

But this is deceptive.  For one, the working age population of the US grew by 16.362 million people or 7.06% from 2007 to August 2014, while the labor force grew by 2.835 million people or only 1.85% during the same period.   The number of employed persons grew by only 321,000 people and unemployed people grew by 2.513 million people or 35.50% during the same period. People Not in the Labor Force grew by 13.526 million or 17.18% during the same period. In fact, People Not in the Labor Force is at an absolute all time high of 92.269 million.

United States
Employment Situation
In Thousand Persons
									2007 to August 2014
	2007	2008	2009	2010	2011	2012	2013	August 2014	Variance	% Variance
Civilian Non Institutional Population	231,867	233,788	235,801	237,830	239,618	243,284	245,679	248,229	16,362	7.06%
Labor Force	153,124	154,287	154,142	153,889	153,617	154,975	155,389	155,959	2,835	1.85%
Employed	146,047	145,362	139,877	139,064	139,869	142,469	143,929	146,368	321	0.22%
Unemployed	7,078	8,924	14,265	14,825	13,747	12,506	11,460	9,591	2,513	35.50%
Not in Labor Force	78,743	79,501	81,659	83,941	86,001	88,310	90,290	92,269	13,526	17.18%

Source: bls.gov


For the United States, the headline Unemployment Rate has dropped down significantly, from a peak of 9.9% in 2009 to just 6.1% as of August 2014.  The Labor Force Participation Rate continues to drop and is now at 62.8% - levels not seen since the late 1970's when women started entering the workforce in droves.  The Employment to Population Ratio has only recovered marginally from its recessionary low of 58.3% to just 59% in August 2014.  It is nowhere near its pre-recession average.  In other words, job growth has been growing only barely faster than the growth in the working age population.

Economists have attributed to this phenomenon to increased retirements among the elderly.  But the Bureau of Labor and Statistics itself  is projecting large increases in the Labor Force Participation Rate among people aged 65 and older. The reality is fewer people can afford to retire.

Washington State


Although Washington State's Unemployment Rate has dropped considerably from a peak of 9.9% in 2010 to just 5.6% as of July 2014, its Labor Force Participation rate has continued to drop to a new low of 63.1% - a level not seen since 1977 when women entered the labor force in considerable numbers.  The Employment to Population Ratio now stands at 59.5% or just 0.4% above its recessionary low as of 2013.

Regional Comparison

So how does the DELMARVA + DC Region stack up to the rest of the United States?

Delaware

The state of Delaware is in a funk, employment-wise.  Its Labor Force Participation Rate, at 61.2% as of July 2014, is even lower than the 62.7% Labor Force Participation Rate the state registered in 1976, the earliest available BLS.Gov data.  Although its Unemployment Rate has dropped from a peak of 8.0% in 2010, to just 6.2% as of July 2014, its Employment to Population Ratio, at 57.4% as of July 2014, is still hovering near the bottom at 56.7% in 2013.

Maryland

Like Delaware, Maryland's Labor Force Participation Rate continues to trend lower, hitting 66.4% as of July 2014 - levels not seen since 1977.  Its Employment to Population Ratio has yet to bottom out. At 62.3% as of July 2014, it is reaching levels not seen since the early 1977.  Its Unemployment Rate, however, has dropped sharply, from a peak of 7.9% as of 2010 to just 6.1% as of July 2014.  As the previous data indicates, much of the drop has come from people dropping out of the labor force altogether.

Virginia

Virginia has seen an uptick in its labor force participation rate, from a post-recessionary bottom of 66.4% in 2013, to 66.7% as of July 2014.  Likewise, its Employment to Population Ratio has improved to 63.2% as of July 2014., slightly higher than its post-recessionary bottom of 62.6% in 2010. Unemployment Rate has dropped from its 2010 peak of 7.1% to just 5.4% as of July 2014.

District of Columbia

The District of Columbia's Labor Force Participation bottomed out at 67.8% in 2011, bounced up to the 69.3% level for 2012 and 2013 and is down again to 68.1% as of July 2014.  Its Employment to Population Ratio bounded up sharply from a low of 60.9% as of 2011 to 63.5% as of 2013 and now stands at 63.1% as of July 2014.  Its Unemployment Rate, which reached a peak of 10.2% as of 2011, now stands at 7.4% as of July 2014.

Charting the US Jobs Recovery - DelMarva + DC Edition - May 2014

Most media discussions on the US Jobs Recovery focus on just one number - the headline Unemployment Rate.  To add color to the first number, financial pundits like to add a second number - the Labor Force Participation Rate.  Both are intertwined and affect each other.  But in the aftermath of the Great Recession, there is a third, much more meaningful number that is almost never discussed - the Employment to Population Ratio.

Definitions

Now, what are these numbers?  Many people will give you a technical description that can be hard to grasp and make your eyes glaze over the minute you hear them.  But the reality is simple.

The Unemployment Rate is the percentage of:

PEOPLE WHO WANT  A JOB BUT DON'T HAVE ONE (Unemployed)/
LABOR FORCE

The Labor Force is:

PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)

The Labor Force Participation Rate is percentage of:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed)]/
WORKING AGE PEOPLE

Working Age People are generally defined as PEOPLE WHO ARE 16 YEARS AND OLDER.  In reality, they are:

[PEOPLE WHO WANT AND HAVE JOBS (Employed) + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE (Unemployed) + PEOPLE WHO ARE NOT IN THE LABOR FORCE (Not in Labor Force)]

The category PEOPLE WHO ARE NOT IN THE LABOR FORCE includes:


PEOPLE WHO ARE IN THE MILITARY
PEOPLE WHO ARE INSTITUTIONALIZED
PEOPLE WHO ARE STUDENTS
PEOPLE WHO ARE HOMEMAKERS
PEOPLE WHO ARE RETIRED
PEOPLE WHO ARE MARGINALLY ATTACHED TO LABOR FORCE (INCLUDING DISCOURAGED WORKERS)


The Employment to Population Ratio is the percentage of:

PEOPLE WHO WANT AND HAVE JOBS/
WORKING AGE PEOPLE

In other words, PEOPLE WHO WANT AND HAVE JOBS/
[PEOPLE WHO WANT AND HAVE JOBS + PEOPLE WHO WANT A JOB BUT DON'T HAVE ONE AND ARE LOOKING FOR ONE + PEOPLE WHO ARE NOT IN THE LABOR FORCE


How does this work out?

According to this chart from the popular financial blog, Calculated Risk, the US, in May 2014, gained back all the jobs lost since the Great Recession started in November 2007.

But this is deceptive.  For one, the working age population of the US grew by 15.795 million people or 6.81% from 2007 to May 2014, while the labor force grew by 2.489 million people or only 1.63% during the same period.   The number of employed persons actually shrank by 233,000 people and unemployed people grew by 2.721 million people or 38.44% during the same period. People Not in the Labor Force grew by 13.266 million or 16.85% during the same period.

United States
Employment Situation
In Thousand Persons
									2007 to May 2014
	2007	2008	2009	2010	2011	2012	2013	May 2014	Variance	% Variance
Civilian Non Institutional Population	231,867	233,788	235,801	237,830	239,618	243,284	245,679	247,662	15,795	6.81%
Labor Force	153,124	154,287	154,142	153,889	153,617	154,975	155,389	155,613	2,489	1.63%
Employed	146,047	145,362	139,877	139,064	139,869	142,469	143,929	145,814	-233	-0.16%
Unemployed	7,078	8,924	14,265	14,825	13,747	12,506	11,460	9,799	2,721	38.44%
Not in Labor Force	78,743	79,501	81,659	83,941	86,001	88,310	90,290	92,009	13,266	16.85%

Source: bls.gov

For the United States, the headline Unemployment Rate has dropped down significantly, from a peak of 9.9% in 2009 to just 6.3% as of May 2014.  The Labor Force Participation Rate continues to drop and is now at 62.8% - levels not seen since the late 1970's when women started entering the workforce in droves.  The Employment to Population Ratio has only recovered marginally from its recessionary low of 58.3% to just 58.9% in May 2014.  It is nowhere near its pre-recession average.  In other words, job growth has been growing only barely faster than the growth in the working age population.

Economists have attributed to this phenomenon to increased retirements among the elderly.  But the Bureau of Labor and Statistics itself  is projecting large increases in the Labor Force Participation Rate among people aged 65 and older. The reality is fewer people can afford to retire.

Regional Comparison

So how does the DELMARVA + DC Region stack up to the rest of the United States?

Delaware

The state of Delaware is in a funk, employment-wise.  Its Labor Force Participation Rate, at 60.8% as of May 2014, is even lower than the 62.7% Labor Force Participation Rate the state registered in 1976, the earliest available BLS.Gov data.  Although its Unemployment Rate has dropped from a peak of 8.0% in 2010, to just 5.9% as of May 2014, its Employment to Population Ratio, at 57.2% as of May 2014, is still hovering near the bottom at 56.7% in 2013.

Maryland

Like Delaware, Maryland's Labor Force Participation Rate continues to trend lower, hitting 66.7% as of May 2014 - levels not seen since the late 1970s.  Its Employment to Population Ratio has yet to bottom out. At 62.9% as of May 2014, it is reaching levels not seen since the early 1980s.  Its Unemployment Rate, however, has dropped sharply, from a peak of 7.9% as of 2010 to just 5.6% as of May 2014.  As the previous data indicates, much of the drop has come from people dropping out of the labor force altogether.

Virginia

Virginia has seen a sharp uptick in its labor force participation rate, from a post-recessionary bottom of 66.4% in 2013, to 67.4% as of May 2014.  Likewise, its Employment to Population Ratio has improved to 63.9% as of May 2014.  Unemployment Rate has dropped from its 2010 peak of 7.1% to just 5.1% as of May 2014.

District of Columbia

The District of Columbia's Labor Force Participation bottomed out at 67.8% in 2011, bounced up to the 69.3% level for 2012 and 2013 and is down again to 68.2% as of May 2014.  Its Employment to Population Ratio bounded up sharply from a low of 60.9% as of 2011 to 63.5% as of 2013 and now stands at 63.0% as of May 2014.  Its Unemployment Rate, which reached a peak of 10.2% as of 2011, now stands at 7.5% as of May 2014.