Commentary

Labor Force Participation Rate Continues Fall in April: 162,000 Drop Out of Labor Force

By Timothy Doescher | May 8, 2017 | 8:43am EDT
Miners line up to go into the elevator shaft at the Virginia-Pocahontas Coal Company Mine #4 near Richlands, Virginia. (Wikimedia Commons Photo)

The April jobs report is in, and the Trump administration is taking a victory lap.

That’s because the Bureau of Labor Statistics reported an increase of 211,000 jobs (up from an unimpressive 79,000 in March) and a drop in the unemployment rate from 4.5 percent to 4.4 percent—the lowest rate since May 2007.

In addition, the number of people who were employed part time for economic reasons—or working part time but want to work full time—fell by 281,000, continuing a positive trend.

The primary gains in jobs came from leisure and hospitality (55,000 jobs), health care and social assistance (37,000 jobs), financial activities and insurance carries (33,000 jobs), and mining/support for mining—which includes the oil and coal industries (15,000 jobs).

Since President Donald Trump was elected, nearly 50,000 jobs have been added in the mining/support for mining sector. This is important, because Trump campaigned on the promise to bring back jobs like these that were lost because of President Barack Obama’s regulations.

But as with most job reports in recent history, the good and not-so-good go hand in hand.

This month, the labor force participation rate fell a 10th of a point to 62.9 percent, continuing the trend of people dropping out of the labor force, or just giving up looking for a job. Last month, 162,000 people joined this discouraged group.

The labor force participation rate is arguably one of our most important economic and social indicators. Currently, the United States has 254,588,000 people that are able to work, and only 160,213,000 are currently participating in the labor force.

With entitlement spending at levels that threaten national solvency, it is important to understand why so many Americans that could be working don’t do so.

There is much work to be done to convince the 94.4 million people currently not working that reentering the workforce is worth it. The best way to achieve this is by creating more jobs through more economic growth.

The slow rate of growth over the last eight years is likely both a symptom and a cause of declining participation in the labor force. Over the last year, we have averaged growth at or below two percent, which is well below the historic average of 3.3 percent.

If growth is the goal, the formula is pretty simple: Obamacare must be repealed, tax cuts and tax reform must be signed into law, and we must move beyond executive orders to substantive legislative reform.

We must continue to cut regulation of all shapes and sizes that get in the way of growth.

It is not enough just to announce an intention to do these things. They must be pushed across the finish line.

When Trump took office on Jan. 20 of this year, he spelled out several goals for his administration.

At the top of that list was to create 25 million jobs over the next 10 years. This would require the economy to create 208,000 jobs each month over the next 10 years.

Some experts have declared that we have reached our peak economic growth. But that is defeatist thinking. If Washington simply gives Americans the economic freedom to innovate, they will find a way to adapt to any circumstance.

Economic growth can also come in unanticipated ways. Just look at the fracking boom. Ten years ago, we were waving the white flag on domestic fossil fuel production and felt totally reliant on foreign energy sources. Now, we are a world leader.

If the Trump administration can translate its policy directives into action, we have the potential to see job growth like never before. Until then, we will continue to see good and bad jobs reports.

Let’s hope the good continues to outweigh the bad.

Timothy Doescher is a research associate at The Heritage Foundation.

Editor's Note: This piece was originally published by The Daily Signal.

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