It’s been more than a decade since the twin calamities of a housing crash and financial crisis savaged the US economy. At long last, its workforce is returning to pre-crisis shape.
In October, 79.7% of Americans aged 25 to 54—what economists call “prime-age” individuals—had jobs, according to the US labor bureau.
That’s the same share as in late 2007, when the US teetered on the brink of the great recession, notes economist Jason Furman, a Harvard professor and chief economist under president Barack Obama.
This population of about 126.5 million is important because it’s the beating heart of the American economy. People in this age group are in the prime of their working years: most of them have finished school and still have many decades ahead of them before retirement. When they struggle, it can signal deeper economic maladies.
And, conversely, the return of America’s prime-age employment to pre-crisis form is one indication that the US’s economic health has improved.
There are others too, though. October payrolls grew an astonishing 250,000 (though this was likely flattered by the distorting effects of hurricanes Florence and Michael. (Workers knocked off the payrolls by Florence in September were added in October, though that artificial bump was likely offset somewhat by those whom Michael put temporarily out of work in October.)
Average hourly wages, unadjusted for inflation, grew a whopping 3.1% versus October 2017. That’s the briskest pace of growth since April 2009 (mind you, hurricane distortions also made this datapoint look unusually strong). Along with jobless claims that have hit 40-plus-year lows, signs of a healthy labor market abound.
Before anyone uncorks the champagne, though, there’s some gloomier context to take in. While employment levels for prime-age workers are reaching pre-crisis levels, they’re still way down from where they were in 2000, before the dot-com era downturn in 2001.
Today’s levels compare favorably to those of late 2007 because the great recession hit before the US employment had time to recover from the previous—and not especially brutal—economic contraction. This becomes clear, too, when you look at the labor force participation rates of prime-age workers.
A broader measure of workforce health, the labor-force participation rate, shows the number of people either employed or actively looking for work as a share of the total population. A low share of labor-force participation suggests that a portion of the population is either unable or unwilling to even look for work. This stat is important because once people have thrown in the towel on trying to get a job, it’s hard to get them to start again.
The American labor force lost a lot of prime-age people in the great recession, though the economy has rebounded enough to get some of those people back to work again. But whether because of societal problems or changes in the US economy’s structure—or something else entirely—there’s still has a long way to go before the American economy is harnessing its core workers the way it did before 2008. And to hit the mark set in the late 1990s and early 2000s, even farther.