Data from the UK Office for National Statistics (ONS) published Wednesday showed that the proportion of the population aged 16 to 64 in work reached 73.1% in the three months to May, a rate that was only previously matched in 2004-5 and in 1974. Earlier this month, the US Bureau of Labor Statistics reported that the participation rate was stable at 62.8% in June -- the lowest since December 1978 - - at time when the number of women entering the workforce was rising.
The US rate was at 66% in 2007 and Daniel Alpert of Westwood Capital, a US financial firm says the fall in the labour force participation rate has been incorrectly attributed, by many economists and media outlets, to factors relating to the retirement of baby boomers, yet the data clearly shows that the participation by those 55 years of age and older has reached historic highs since the Great Recession, while the principal erosion has been experienced in younger age brackets. Labour force participation by 25 to 34 year olds, for example, has fallen by 4% from its high in 2000.
Larry Summers, Harvard economist and former Treasury secretary, said in a lecture [pdf] last year in respect of the non-employment of men aged 25-54 in the US: "What you see is that in a secular sense, going back a long time, the fraction of them who are not working once one takes the cycle out has been increasing. I summarize this by saying that in the 1950s and 60s, one in 20 men between the age of 25 and 54 was not working. If you do a simple extrapolation based on trend and cycle to the period a decade from now, between one in six and one in seven men between the age of 25 and 54 will not be working.[ ]
In the United States today a higher fraction of the workforce receives disability insurance than does production work in manufacturing. (Many workers in the manufacturing sector are not production workers)... I think it is also fair to say that the evolution and growth of disability insurance is substantially driven also by the technological and social changes that are leading to a smaller fraction of the workforce working."
The ONS said [pdf] on Wednesday said that the UK jobless rate fell to 6.5% of the workforce, while the number of people in work rose to new record of 30.6m.
However, average weekly wages rose 0.7% in the 12 month period compared with a 1.5% May inflation rate and a June rate of 1.9%.
John Philpott, the Jobs Economist, commented "The British jobs market is therefore at present something of an oddity: a record equalling employment rate, yet with cash pay rises at a record low and a real wage squeeze that is still biting hard. We should be celebrating an economy clearly on the fast track back to full employment. But full employment without stronger growth in pay and productivity is not the kind of full employment to hang out the bunting for."
Daniel Alpert, managing partner of Westwood Capital said [pdf]: "The US produced over 1.3m jobs in H1 2014, but over 56% (740,000) of those jobs were in sectors that pay an average of only $614 per week ($31,928 per year), compared to the other 44% of jobs created (591,000) that were in sectors that pay an average of $1,137 per week ($59,124 per year). Of the lower paying jobs, a full 207,000 of the 1.3m jobs created in H1 2014 were in the Leisure and Hospitality sector, in which the prevailing weekly pay is $362 ($18,842 per year).
The low wage sectors, Retail Trade, Administrative and Waste Services (aka. Temps and Trash), and Leisure and Hospitality, taken together offered a prevailing wage of $16.19 per hour at the end of the half. Interestingly, this was an increase of 1.66% for the six months, which was slightly higher than CPI inflation (by 0.36%) for the period. Hourly pay for higher wage jobs, however, fell relative to inflation, by 0.16% on average. Owing to the very short hours offered in the low wage categories of jobs (29.73 hours per week on average), it would appear that low wage labour has hit a floor at survival level and bounced back some, while the better paying positions saw less bargaining power on the part of labour."
This week Mort Zuckerman, editor-in-chief of US News & World Report, publisher of the New York Daily News and founder and chairman of Boston Properties, blamed Obamacare, the new health insurance program, for the rise in part-time employment but since 2010 full-time jobs have risen and part-time jobs have fallen.
The 77-year old billionaire wrote: "Full-time jobs last month plunged by 523,000, according to the Bureau of Labor Statistics. What has increased are part-time jobs. They soared by about 800,000 to more than 28m.
On Friday, we will look at self employment and part-time work in the UK and US...
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