The disappointing payroll numbers (115,000 new jobs were reported created last month, significantly below estimates) are not the big story in the labor statistics released this morning. The big story, and the bad news, is the continued shrinkage of the workforce.
Half a million Americans checked out of the economy last month: they stopped looking for work. A smaller percentage of the population is working or looking for work today than at any time since the first year of Ronald Reagan’s presidency: 1981.
The workforce shrinkage is if anything worse than these numbers show. Reports that both legal and illegal immigrants are leaving the country suggest that the workforce has declined by a bit more than the 522,000 people the official statistics report.
There are some healthy underlying trends. The private sector is growing faster than the public sector. But we need to do more: if the American middle class is going to be stable and prosperous, private sector demand for workers needs to grow. Small business and start ups will be the key to that. The central policy debate in this country needs to be over how we can create the most favorable possible conditions for the development of a wave of new business.