Why Still No Real Jobs Takeoff?

From John Taylor.

For each month of this recovery, I’ve been tracking the change in the employment-to-population ratio and comparing it with the recovery from the previous deep recession in the 1980s.  Here is the latest update based on today’s release of February data:

and here is a post from 2011 for comparison. It’s remarkable that there’s still no take-off and the percentage employed is still below what it was a bottom of the recession.

















As would be expected after so many disappointing years, some are now seeing this as a secular issue of low labor force participation unrelated to the slow recovery from the recession. But research by Chris Erceg and Andy Levin, (Labor Force Participation and Monetary Policy in the Wake of the Great Recession) provides what they consider to be “compelling evidence that cyclical factors account for the bulk of the post-2007 decline in labor force participation.”  One convincing piece of evidence is their chart (see below) which shows the labor force participation rate (LFPR) projection by BLS and CBO before the downturn based on the demographics about which there have been no surprise.  The actual LFPR (63.0 percent as of today) is well below these projections.