The US employment ratio in August 2015 was at 59.4% — the same level as the recession trough in June 2009 and not previously recorded since March 1981. Meanwhile the labour force participation rate in August at 62.6% was 3.1% lower than in June 2009 and until June 2015 when it was also at 62.6%, the low level had not been seen since early 1978 when increasing numbers of married women began joining the workforce.

The Bureau of Labor Statistics (BLS) says the employment ratio is the proportion of the civilian noninstitutional population (excluding mainly 2.4m prisoners) aged 16 years and over that is employed. The labour participation rate is the labour force as a percentage of the civilian noninstitutional population — the labour force comprises the employed who work for at least 1 hour for pay in a week plus the unemployed who are available/ seeking work.

 

The employment ratio was 62.7% in Dec 2007 at the start of the recession and both the start and trough were determined by the Business Cycle Dating Committee. The labour force participation rate was at 66.0% in Dec 2007.

Last Friday the BLS reported that the official unemployment rate fell to 5.1% in August while the broad rate including workers who had given up looking for work during the crisis or were part-time workers seeking more hours, was at 10.3%.

The US has added 8m jobs in three years, its fastest rate since 2000, while the official jobless rate, was at its lowest since April 2008, five months before the Lehman bankruptcy. The private sector added 13.1m jobs over 66 straight months of job growth, extending the longest streak on record. However, it's underemployment, and the rise in the numbers who have withdrawn from the workforce that temper this rosy picture.

One of the factors in the decline in the participation in the workforce is the retirement of the so-called postwar baby-boom generation and focusing on the 25-54 year old segment of the population excludes retirees and young people in education.

In August the ratio was 77.2% and 79.7% in Dec 2007 according to the BLS. It peaked at 81.9% in Apr 2000.

OECD data show the US rate at 76.7% in 2014; Germany was at 83.5%; Japan at 82%; UK at 82%; France at 80.5%; Italy at 67.9%; Ireland at 72.3%; Sweden at 85.4% and Denmark at 82%.  

The employment ratio for men fell from 95.8% in Q1 1953 to 89.4% in Q1 2000, to 84.4% in Q2 2015.

Men with low skills and education levels have been hit in particular by the decline in manufacturing employment.

There were more than 17m employed in manufacturing in early 2000 and just over 12m in Aug 2015.

Big US companies are no longer big employers. For example, General Motors had over 618,000 employed in the US in 1979 — in well-paid jobs; today, General Electric employs about 133,000 in the US and Apple about 66,000 — the majority in low-paid retail.

US pay/ productivity gap; Real wages for typical worker flat since 1970s

America’s economy is motoring again, and the Federal Reserve is expected to raise interest rates for the first time since 2006 — but the timing is uncertain. Is the real economy ready for a rate rise? The FT's US economics editor Sam Fleming finds out.