Quarter Million More Americans Not in Labor Force in July

Quarter Million More Americans Not in Labor Force in July

Friday’s dismal jobs report was the latest evidence that hiring is slowing. The reported 162K gain in jobs fell well below expectations of 185-200k job gains. Even that modest increase is misleading, as over 100k of these jobs were part-time. Even worse, July saw a quarter-million increase in the number of Americans not in the labor force at all. There are 1.6 million more Americans not in the labor force than in July of last year.  

There are three key numbers to understand when looking at the labor market in the US. First is the civilian adult population. This is the total number of Americans who aren’t in the military or prison and are potentially available for work. Next is the civilian labor force, or the proportion of Americans who are employed or are actively looking for a job. This proportion dipped in July to just 63.4%. In other words, just 63% of Americans who could be working are employed or looking for work. 

The number of Americans not in the labor force at all jumped by 240k last month. 37k Americans simply gave up looking for work last month, but the total adult population of the US increased by 204k in July. Taken all together, almost 90 million adults aren’t in the labor force. In July last year, 88 million weren’t. 

The steady increase of Americans not in the labor force acts as a brake on economic growth. There is simply a limit to how fast the economy can grow when a small share of the population can find work. That the new jobs that are being created are part-time makes the potential growth even worse. 

Between fiscal and monetary policy, the feds have pumped well over $5 trillion into the economy over the last four years. Yet, the job market can’t even keep up with population growth. There is almost no way this ends well. 

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