CEPR - Center for Economic and Policy Research

Employment Rate Falls, Despite Strong Job Growth

November 2, 2007 (Jobs Byte)

Employment Rate Falls, Despite Strong Job Growth

Jobs Byte by Dean Baker

For Immediate Release: November 2, 2007
Contact: Alan Barber, (202) 293-5380 x115

Declining restaurant sales, coupled with strong job growth, implies plunging productivity.
The employment rate edged down to 62.7 percent, the lowest rate since June of 2005, even though the establishment survey showed the economy adding a stronger than expected 166,000 jobs. The job growth was concentrated in restaurants, health care, and temporary employment. The three sectors together accounted for 70.2 percent of the job gains reported for the private sector in October.

While the jobs numbers reported in October are surprisingly strong, most of the other information in this month’s report is considerably less positive. The drop in employment rates is especially discouraging. This decline has been an ongoing trend since the end of 2006, with the employment to population ratio (EPOP) down by 0.6 percentage points over this period. This drop is being driven by younger workers, as people over age 55 continue to work in growing numbers.

Workers between the ages of 35 and 44 have experienced the sharpest drop in EPOPs, falling 0.8 percentage points from 81.5 percent in January to 80.7 percent in October. This is a full 2 percentage points below their peak EPOP of 82.7 percent in 2000. The falloff for men over this period has been sharper than for women, with EPOPs for men falling 0.8 pp over the last year, while EPOPs for women are down by just 0.2 pp.