| | | Paul Krugman Opinion Columnist | | There are people who pore over the details of each new economic report, looking for clues to the economy's next move. I'm not one of them — not because this kind of tea-leaf reading is worthless, although it's overrated, but because it's a dark art I've never tried to master. Guessing what next quarter's GDP growth number will be is a very different enterprise from trying to understand how the economy works, which in some sense is still my main job. | | But the accumulation of short-term reports does, eventually, tell you something about the basics. And there was a message in the latest jobs report that is consistent with what these reports have been telling us for at least the past year or two. Namely, the workers are alright. | | To see what I mean by that, consider a number many economists now believe gives a better picture of the job market than the official unemployment rate: the prime-age employment ratio, the percentage of Americans in their prime working years, ages 25 to 54, who have jobs. | | As you can see from the figure, on the eve of the 2008 financial crisis, the prime-age employment ratio was just shy of 80 percent. When the crisis struck, it dropped to 75 percent, and stayed low for a long time — long enough for many influential people to declare, with an air of great wisdom, that prime-age employment would never recover to its previous level. | | Why not? Well, declared the Very Serious People (a term I used a lot at the time), U.S. workers just didn't have the skills the modern economy needed. And maybe they lacked motivation too, paying video games instead of working, or turning to drugs and alcohol. | | Some of us with a sense of history recognized these arguments: Influential people made similar claims in the 1930s, asserting that high unemployment reflected the inadequacy of American workers, not a simple lack of sufficient demand. But then came World War II, and suddenly all those inadequate workers proved perfectly capable of operating the most awesome defense economy the world had ever seen. | | Sure enough, after late 2011 prime-age employment began recovering, and it just kept on recovering, year after year. And at this point prime-age employment is right back where it was before the financial crisis. American workers do, it turns out, have both the skills and the motivation to work productively, and did all along. Oh, they may lack some specific skills that employers need — but lo and behold, in a tight labor market many employers are willing to take on and train workers who clearly have the native ability to do jobs they haven't done before. | | So what are we to make of the long trough in employment from 2007 to about 2017? The answer is that it represented a huge waste of human and economic potential. We should have been doing whatever it took to boost the economy, including a lot of infrastructure spending. Instead, our elite obsessed over entitlement reform while insisting that our workers were no good. | | |
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