The unemployment rate is a much watched, reported, and discussed measure of what’s happening to the jobs market. Last month, many pundits noted, the unemployment rate went back up to 9.1 percent.
Despite the attention it is given, the unemployment rate is not a very good measure of the employment situation. That’s because it depends a lot on what’s going on with labor force participation. If those out of a job give up looking for work because the economic situation is poor, the unemployment rate declines. And if the economy improves and those people re-enter the labor force, the unemployment rate rises.
A better measure of what’s going on in the jobs market is the share of the population that is employed. As the figure below indicates, that measure continues to look horrible. Back in November of 2007, the month before the Great Recession began, 62.9 percent of the U.S. population was employed. In May of 2011, that share was down to 58.4 percent.
To have the same fraction of Americans working as we had before the recession, 10.8 million more Americans would need to be employed. That’s an enormous number of people we have to put to work.