Although the job market is tighter than it’s been in years, U.S. Secretary of Commerce Wilbur Ross recently told Yahoo Finance’s Editor-in-Chief Andy Serwer that he doesn’t think that the economy’s post-crisis expansion has run its course. However, there is a need for more American workers.
“The most recent data that came out was strong,” he said during Yahoo Finance’s All Markets Summit on November 13. “Job creation has been very strong. We have something like 7.1 million unfilled jobs and only six million unemployed people.”
He continued: “So we need more workforce participation. It’s now at a point where something like a third of working-age people don’t have a job and don’t want one. They don’t regard themselves as being in the workforce.”
The labor force participation rate refers to “the number of people who are either employed or are actively looking for work,” according to Investopedia. In October 2018, it was 62.9% of the working age population.
The existing pool of American workers
As the above graph from FRED Economic Data shows, the civilian labor force participation rate has been gradually decreasing since the Financial Crisis. In January 2007, the rate was 66.4%. According to the Bureau of Labor Statistics, this was a 0.2% increase from both the previous month and October 2017. Overall, the rate has not exceeded 63% in 2018.
There are several factors as to why some working age people choose not to be in the labor force, ranging from homemaking to opioid abuse. Ross attributes the high number of people who “don’t want” to be in the workforce to a skills mismatch.
“That’s part of why Ivanka Trump is heading this big effort for worker training, for apprenticeships, for all sorts of activities to bridge the gap,” he said, “Because in many cases, our educational system is neither preparing people through vocational training for the old economy, nor preparing students through science and math instruction for the new economy.”
As a result, jobs are available but many people don’t have the “fundamental skill sets to achieve them,” Ross said. However, “we’re gonna try to fix that.”
Adriana is an associate editor for Yahoo Finance. Follow her on Twitter @adrianambells.
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