…What happens to the participation rate is an important question. If the Civilian noninstitutional population (over 16 years old) grows by about 2 million per year – and the participation rate stays flat – the economy will need to add about 100 thousand jobs per month to keep the unemployment rate steady at 8.9%.
If the population grows faster (say 2.5 million per year), and/or the participation rate rises, it could take significantly more jobs per month to hold the unemployment rate steady. As an example, if the working age population grows 2.5 million per year and the participation rate rises to 65% (from 64.2%) over the next two years, the economy will need to add 200 thousand jobs per month to hold the unemployment rate steady.
That is why forecasting the participation rate is important – and why reports of the number of jobs needed to hold the unemployment rate steady are all over the place (and can be very confusing – and I’m guilty of using different numbers).
Here is a look at some the long term trends (updating graphs through February 2011)…
Worth a visit this weekend. It also points to questions regarding other types of policy questions for planners.