Nice speech, President Trump. So why mar it with ridiculous and misleading claims about the state of the US job market?
Trump has repeatedly claimed that “94 million Americans are out of the labor force,” a statement he made twice in his otherwise measured speech to Congress on February 28. In a technical sense, Trump’s number is correct. But it is meant to create the impression that something is wrong with the US labor force that actually isn’t, and the many people who parrot Trump’s zingers often interpret this to mean that 94 million Americans are unemployed. That’s crazy.
Some simple math: The total US population is about 325 million. The “working-age” population—those between 16 and 65—numbers about 206 million, excluding people in jail and other institutions. There are about 152 million Americans with jobs. Another 7.6 million Americans are unemployed and looking for work. The labor force is defined as those with civilian jobs and those looking for jobs. So the total US labor force is about 160 million.
If you subtract the number of Americans in the labor force from the total working-age population, you get about 46 million working-age Americans who are not counted as part of the labor force because they’re not working or looking for work. Does that sound terrible? Well, before you answer, consider that 6.5% of people over 16 say they’re not in the labor force because they’re disabled, 6.4% say they’re going to school, and 5.4% say they have home responsibilities, according to a 2015 analysis by the Bureau of Labor Statistics.
Does Trump believe every college student should quit school and get a job? That every parent who’s home taking care of a kid should immediately hire daycare and get to work? That cops and firefighters who retired because of on-the-job injuries need to tough it out and get back to work? If you believe every working-age American ought to be in the labor force, then the answer to these questions is yes.
Trump’s figure of 94 million people not in the labor force is roughly twice the number of working-age Americans not in the labor force. So where do the rest come from? Yahoo Finance’s Ash Bennington conducted a deeper dive into the makeup of the labor force, but here’s the simple answer: They’re retired. Of 48 million Americans over 65, about 6.7 million of them work, leaving 41 million who don’t. Trump seems to be saying older Americans ought to stay on the job until they die.
If you add up 46 million working-age Americans who don’t work, and another 41 million others over 65, you get 87 million Americans not in the labor force. The other 7 million or so include people who are in jail or other institutions and not counted as part of the labor force. So Trump’s 94 million includes inmates as well.
No serious economist thinks every person in America over the age of 16 ought to have a job. Here are the serious problems we do have: Nearly 8 million Americans are legitimately unemployed and looking for a job. Another 7.6 million are underemployed, either barely working or working less than they want because they can’t find better opportunities. So that’s 16 million Americans who need help right there.
Many others work as much as they can, but are still falling behind because their pay hasn’t kept up with expenses. And there may be 10 million working-age men who are so demoralized about their prospects they’re not even trying to work, even though they’re healthy enough to, a phenomenon economist Nicholas Eberstadt calls “America’s invisible crisis.”
Trump has pledged to help the “forgotten men and women of America,” and his early focus on creating more jobs seems to be encouraging. But Trump won’t help the cause by making legitimate problems sound far worse than they are. In fact, as the baby boomers flood into retirement, the number of Americans “not in the labor force” could expand by Trump’s third or fourth year. By then, he may realize there’s nothing inherently wrong with that.
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Rick Newman is the author of four books, including Rebounders: How Winners Pivot from Setback to Success. Follow him on Twitter: @rickjnewman