A Few Thoughts About The US Labor Market

In a speech to the joint session of Congress that was widely recognized as “presidential,” US President Trump said twice that there are 94 mln Americans out of the labor market. It is not a lie or fake news or even an alternative fact, but it is so misleading that it is incredulous.  

Here is the relevant context. The US total population is about 325 mln people.  Of that universe, there are roughly 205 mln working age people (16-65).  Of the working age people, 152 mln have jobs, and almost eight mln are looking for work. These 159 mln people are considered in the labor market. That leaves 46 mln (205-159) working age people not working and not looking for work. They are not in the labor market.  

Who are these 46 mln people? They do not only include discouraged people who have given up looking for a job. They also are disabled people, students going to school, those who have home responsibilities (taking care of children or elderly or disabled) and those that have retired early (i.e. before 65).  

Still, this leaves us far from Trump’s 94 mln figure. Who else are included? Most of the remaining 49 mln people are retired American over the age of 65. There are 48 mln Americans older than 65, of while almost seven mln are working. That leaves 41 mln Americans who are not in the labor market and are part of the 94 mln that Trump touted.  

Between working age people not working or looking for a job and retired people not working, we can account for 87 mln of Trump’s 94 mln figure. Who are the other seven million people? Rick Newman, a journalist at Yahoo Finance, suggests the seven million are incarcerated or otherwise institutionalized. The rate of incarceration in the US continues to rise. It stood at 2.25 mln in 2014, for example. And after servicing time, employment opportunities are still difficult to secure.