Friday's employment figures were terrible across the board, although some have naively interpreted the decline in the headline unemployment rate (from 8.3% to 8.1%) as positive news. Unfortunately there is nothing positive about this change. As before, the decline is simply an indication of people dropping out of the labor force. This is clearly visible in the labor force participation rate (discussed earlier this year), which has now declined to the lowest level in over 3 decades. In fact the only reason that labor participation in the late 70s was lower than today is that women were still in the process of entering the workforce. Labor force participation among men is now at the lowest level on record - going back to 1948. This includes men with a college education.
What's particularly troubling is the relatively recent sharp drop off in the participation ratio for younger men (between the ages of 20 and 24), which is also at the lowest level on record (chart below).
|US labor participation rate ages 20-24 SA (Bloomberg)|
Once again, this is a structural issue that can not be remedied with monetary policy.