Participation

The latest Minnesota employment statistics were released today, and they are being hailed in the usual precincts.

Weekly Minneapolis Star Tribune columnist and constant liberal Lori Sturdevant took to Twitter to declare,

4.3 percent state unemployment rate is lowest since Nov. '06; not since dot-com years was it consistently lower.

Digging into the numbers, one quickly discovers that the state unemployment rate is not falling because more jobs are being created, the rate is falling because fewer people are bothering to look for work.

As of August, the state’s labor force participation rate stands at 70.3 percent.  Looking at the raw numbers (not seasonally adjusted), the unemployment rate fell last month, even as the number of jobs fell.  The fall in the size of the labor force was even greater, producing the reduction in the unemployment rate.

In other words, the Minnesota economy is not producing new jobs:  we are counting on older workers retiring to free up old jobs.

Back in the “dot-com years” hailed by Sturdevant, the labor force participation rate was much higher.  Exactly a dozen years ago, in August 2002, the participation rate stood at 75.8 percent.  If we had a labor force that size in 2014, the current state unemployment rate would stand at 10.8 percent.

Yes, the labor force participation rate is falling, in part, because the population is aging.  But that is the point.  Our demographics are changing (more older people, fewer school-age children), but our economic policies (higher taxes, more regulation, ever-bigger government) assume the baby-boom-led demographics of the 1960’s.