By now everyone knows about the Rip Van Winkle effect in stocks: the "noughties" were a snoozer, with the stock market lower on December 31, 2009 than on January 1, 2000. Yet what may have escaped most people is that the decade was also a scratch in terms of employment: the country now has essentially the same number of employed people as it did 10 years ago.
The problem, of course, is that both the total population, and the size of the workforce have not stayed flat over the past 10 years. The charts below demonstrate the Employment-To-Population ratio for all time, and, more disturbingly, for the past 3 years. This ratio is now the lowest it has been in almost 30 years.
David Rosenberg, who made the observation, had this to say about this very troubling trend:
We started the decade with a national payroll level of 130.8 million. We finished the decade practically unchanged at 130.9 million. Meanwhile, the total pool of available labour rose from 146 million to 159 million. In other words, we have the same number of jobs today as we did a decade ago, and yet we also have 13 million more people competing for them. It was more than just a lost decade for the equity market. It was a lost decade for the labour market. Today’s report validated the Fed’s concern over the outlook for employment, which dominated the FOMC minutes released earlier in the week. Those pundits calling for an early exit from the central bank’s accommodative stance may have some reconsidering to do.
An even better way to visualize this, is the difference between the total number of civilians employed and the total US population (308.3 million). The number in December is a record 170.5 million. Keep in mind only 137.8 million are currently employed according to the BLS.
There isn't much spinability here. The employment picture in America is horrendous and getting worse. In the worlds of Rosenberg again:
The so-called ‘employment rate’ — the ratio of employment to population — fell 58.2% from 58.5% in November and the cycle peak of 63.4% in 2007. This is extremely significant because what it means is that it would take an expansion in employment of 20 million over the next five years just to get back to those old cycle highs. But here’s the problem — the country has never before managed to come close to creating that number of jobs over a half-decade period, so what the future holds is one of ongoing deflationary labour market pressure as far as the eye can see.
Yet so long as the upper 5% of society keep spending (and keeping their jobs), all should be well - after all it is them, and their Wall Street connections, that keep the consumer economy humming. However, there is only so much the mega-wealthy can do to sustain the economy. And with an ever smaller participation by the the middle class in the US economy, the outcome can be only one - a slow, gradual decline to irrelevance: both for America and the 300+ million people who inhabit it.