The first Labor Day celebrations in the late 1800’s in New York City were billed by union leaders as a working man’s holiday. That idea expanded over the years to union celebrations of the trades across the country.
On this Labor Day, regardless of whether you are a union member, the condition of America’s workforce is challenged, to say the least.
The most glaring number which indicates a problem is the workforce participation rate. According to the U.S. Bureau of Labor Statistics, the percent of people in the civilian labor force has declined from more than 67 percent ten years ago to just under 63 percent. (The labor force is defined as those working or actively looking for work.)
One of the reasons for the decline is that aging baby boomers are retiring. However, economists say a disturbing trend is that more people are becoming discouraged and dropping out of the labor force or are underemployed.
Josh Zumbrun, writing in the Wall Street Journal last month, reported that 12.2 percent of workers either can’t find a job or have a part-time job, but want to work full-time. “This measure remains highly elevated, suggesting a still-weak labor market.”
Federal Reserve Chair Janet Yellen addressed the labor force issue during a symposium last month in Jackson Hole, Wyoming. “Five years after the end of the recession, the labor market has yet to fully recover,” she said.
The weak recovery has also had an impact on how much workers are paid. “There has been little evidence of any broad-based acceleration in either wages or compensation,” Yellen said. “The recent behavior of both nominal and real wages point to weaker labor market conditions than would be indicated by the current unemployment rate.” (6.2 percent in July.)
The demographics present another problem. Economist Robert Samuelson says sixty percent of the long-term jobless are 35 or older. “The public policy question is, ‘What can we do about the long-term unemployed?’ And the candid answer is, ‘We don’t know.’”
Companies shy away from hiring older workers who command higher wages and may present greater health care costs. The longer a worker is out of a job, the more difficult it is for them to regain employment, so they may become discouraged and stop looking.
The current condition puts an obvious financial strain on the individuals who cannot find work or are under-employed. But it’s also unhealthy for the country because a smaller percentage of the workforce must bear a larger share of the cost of running the country.
It’s appropriate to take a day off today to pay homage to American workers and their contributions to building a great nation. What’s troubling, however, is that too many of today’s workers will have no job to report to tomorrow morning.