After a few months of encouraging jobs growth, the December employment report was a bummer. It indicated that the economy added only 74,000 jobs — far below the 200,000 that most economists were forecasting. Even though the job growth news was disappointing, the unemployment rate declined, because another 347,000 Americans stopped working or looking for work.
The economists think that December’s job growth number was an aberration that may have been caused by cold weather or other temporary conditions. Let’s assume they are right — although economists seem to be wrong in their forecasts much more often than they are on the money — and the job growth returns to the 150,000 to 200,000 new jobs per month rate we saw for most of 2013. Even if that happens, I think the focus on the job growth number is misplaced.
We need jobs, to be sure — but we also need to have people working and looking for work, which is why the 347,000 number is the more important one. Since the Great Recession began more than five years ago, millions of people have dropped out of the labor market, and the percentage of Americans who are working is at its lowest point in decades. Why have those people given up? What are they doing with their lives? How do we get them back into the job market?
These are not abstract questions. The viability of programs like Social Security depends on a healthy job market in which working Americans are funding the payments to those who are retired or otherwise eligible for benefits. Every person who stops working because they cannot find a job won’t be making that contribution — and the long-term viability of the Social Security system and similar programs becomes more perilous.
The loss of the contributions of millions of expected wage-earners inevitably will have a dramatic impact, and if we can’t figure out how to get people to reengage in the job market, we can expect to see dire predictions of the consequences for Social Security benefits. That inevitability is deeply concerning to us forty- and fifty-somethings who have been paying into Social Security for decades and hope that it is still around when, years from now, we reach the point of retirement.