America's Vanishing Worker: The Truth Behind The "Recovery" Propaganda

The biggest paradox of the so-called US recovery is that in the same report in which the US Department of Labor reported that the US unemployment has dropped to a depression-low 5.4%, a level suggesting near zero "slack" in the labor force, the BLS also indicated that the number of people not in the labor force rose to a fresh all time high of 93.2 million, keeping the participation rate at a level first seen in 1978.

 

How does one make sense of this glaring contradiction and paradoxical data, which one one hand suggest the recovery is fully in place, while on the other screams depression?

For the answer we go to the WSJ's report on the curious case of America's vanishing worker.

To be sure, this "curious case" covers nothing new for regular Zero Hedge readers, but may explain to casual observers how it is possible that America's labor metrics have devolved to such a Schrodingerian state in which the US labor market is both alive and dead, depending on whose propaganda one observes.

For the answer, the WSJ tracks the career, or rather lack thereof, of Denny Ryder of Decatur, Illinois, 47 years old, who is one of hundreds of thousands of (former) employees in the industrial Midwest who has been forced to move away, retire or give up on finding a job. As a result, the unemployment rate in this has fallen even as Denny is no closer to being able to provide for his family.

As the WSJ reports, "by one key gauge of economic health, this industrial city three hours south of Chicago is well on the way to recovery. Hit hard by the recession, when its unemployment rate topped 14%, Decatur over the past year has seen one of the swiftest declines in joblessness in the country, with the rate dropping to 7% in March from 10.2% a year earlier."

The problem: it's nothing but a statistical mirage, a lie.

[L]ook closer, and this city of 75,000 resembles many communities across the industrial Midwest, where the unemployment rate is falling fast in part because workers are disappearing: moving away, retiring or no longer looking for a job.

 

“In cases like that, the unemployment rate makes things look better than they really are,” said Karl Kuykendall, U.S. regional economist at IHS Global Insight. In terms of overall economic growth, he said, “a decline in population and workforce is devastating.”

 

[T]he falling unemployment rate doesn’t tell the full story of a recovery that remains uneven nearly six years after the recession ended. Among the 20 metropolitan areas where unemployment fell by at least 2.7 percentage points in the past year, 16 also saw their workforces shrink over the same period, according to Labor Department data. Half of those were in Michigan or Illinois, including Detroit, Decatur, Flint, Mich., and Rockford, Ill.

 

Most places saw at least some hiring and job creation. In Decatur, though, payrolls fell over the past year due to layoffs, attrition, transfers or other causes.

In other words, anyone daring to look closer behind the thin facade of the "recovery" uncovers a rotting, collapsing core: an economy not only not flourishing, but shrinking even as it creates the false impression of growth.

Behold the recovery "mirage" in four simple charts:

Back to Denny Ryder, who wasn’t looking to leave Decatur, where he was born and raised. But he was laid off from a Caterpillar Inc. plant here in late 2013 as the heavy-equipment maker faced a slowdown in demand from mining companies.

What happens next is a story familiar to millions of Americans who not only have no weekly paycheck, but whose plight no longer is even accounted for in the Labor department's monthly assessment of US economic health.

So Mr. Ryder and his wife relocated to Winston-Salem, N.C., last year where he found work at a Caterpillar contractor. While Mr. Ryder was confident he could find a job in Decatur, he didn’t feel it would match the wages and benefits at Caterpillar, where he worked for 19 years. “I probably could have lost a lot of money and found a job in Decatur,” said Mr. Ryder, who has taken to life in North Carolina, from enjoying the hills to swimming in the ocean for the first time.

"Probably." And perhaps, not. That's the magic of proving a negative: it's impossible which is why economists do it all the time.

What one can prove looking at the data, is that any suggestion of a wholesale economic recovery is nothing but Goebbelsian propaganda.

The fitful recovery in Decatur has laid bare challenges building for decades in many places in the Midwest and Northeast. Populations are shrinking, and the workforce is getting older. A historical reliance on manufacturing has hurt aging industrial cities as the U.S. economy continues its shift to service jobs. And the recession expanded the share of the working-age population who don’t have a job and aren’t looking for one.

 

In the Decatur area, the Labor Department’s rough estimates show falling unemployment, a shrinking labor force and declining nonfarm payrolls. But the data don’t explain why the workforce is smaller and where the unemployed are going.

 

There are clues, such as the lunch crowd at the Good Samaritan Inn, a soup kitchen where the Rev. Stacey Brohard is executive director. He said many people lack skills or face other barriers to jobs and have given up on finding work. The recession only increased their ranks, he said.

You mean soaring soup lines aren't counted as employed by the BLS? How is that possible when hookers and drug dealers somehow contribute to GDP in the UK, Spain and Italy? Surely someone at the BLS will promptly fix this oversight.

But it's not just the Labor department's blatant fabrication of a recovery narrative: what is worse is that America's aging workers have been left to fend for themselves even as their absence from any official counts is meant to signify America's fake economic renaissance.

Decatur’s population skews older—the metro area’s median age was 39.7 in 2013, compared with 37.5 for the U.S. as a whole. Some older workers were laid off or took early retirement during the downturn but remained in the labor force, looking for work. Now, with the stock market near all-time highs, their portfolios look healthier and they feel more comfortable retiring for good, said Ron Payne, a labor market economist at the Illinois Department of Employment Security.

 

Decatur faces a dual challenge: getting older workers retrained so they can extend their careers, and keeping younger workers from moving away. Richland Community College increasingly is concentrating on people over 50 years old—many of whom haven’t been in a classroom in decades.

And it's doing a damn good job: as we also showed last week, the number of Americans 55 and older who do have a job has never been higher. Surely the basis of any solid recovery.

As for the younger ones, why they too are in luck: "City officials are courting young professionals with moves such as banning trucks from downtown, promoting outdoor dining and developing recreational opportunities around Lake Decatur." Speaking of outdoor dining, these are precisely the jobs the young end up getting because if there is one thing America has a record of in addition to jobs for old workers, it is a record number of waiter and bartender jobs as well.

It's not all bad:

Since the recession, the city has built a new water tower, replaced sewer lines and cut the ribbon on a new freight-rail terminal—all with the goal of retaining industrial employers and attracting new ones.

 

“First, it’s recovery, which is the phase we’re probably still in right now, but expansion eventually follows that,” said Ryan McCrady, president of city’s economic-development corporation.

Which is also known as "hope" which always dies last. Sadly, for the vast majority of Americans "hope" is all they have left.

As for the 1% of US society which has reaped the benefits of 7 years of ZIRP and QE, there we will admit: the recovery is all too real.