As we celebrated our three day holiday, most of us didn’t think about labor. Of course, Labor Day was created to celebrate the achievements of the American worker. With that being said, what is the state of labor?
Labor Utilization Rate
First, let’s look at the size of the labor force. We could use the government unemployment rate, but there are a number of loopholes in that number. The labor utilization rate tells the story more accurately.
According to the Bureau of Labor Statistics, the labor utilization rate is currently at 62.8%. This means that of working age adults, nearly 40% percent of the population are not working. Yes, I know that this number includes college aged kids and early retirees, but this statistic has not been this low in 38 years. We need more people entering the workforce for our nation’s economic health.
Average Work Week
For those of us who have jobs, what does the average work week look like?
Not that hot. In fact, we are not even filling a forty hour week. In the graph below you will find the average work week in hours:
How about income?
According to the Saint Louis Federal Reserve, real median household income is back to 1996 levels as you will see in the graph below.
To put it another way, we have had 20 years without wage growth.
Most families, in addition to income, have debt. The chart below illustrates household debt. As you can see, household debt is back on the rise from its peak in 2008:
These metrics point to a weak labor market, but they also provide confirmation of a recent poll that really struck me. According to Bankrate.com, only 37 percent of Americans have enough money to pay for a $500 emergency. The rest said they would have to find the money by cutting back, charging the expense or borrowing from family and friends.
We can say that these are macroeconomic problems, but when think of the families needing to pay car repair bills or medical deductibles it gets more real and personal. And this doesn’t even touch the topic of retirement and elder self-sufficiency .
We are definitely in a political season. However, regardless of your politics, I believe we can all agree the state of labor needs to improve.