Employment Rate

The unemployment rate gets all the focus and sometimes receives strong criticism about the way it is computed. Why are discouraged workers not counted as unemployed when they don’t have a job? What about the underemployed, those who want a better job but are stuck at lower paying part-time jobs?

Perhaps another way to view the job situation is to simply look at the employment rate (as opposed to the unemployment rate) by counting how many have jobs divided by the total civilian population of those aged 16 and over. The following chart shows the employment rate in America. After bouncing around at 61 to 64 percent employment rate for most of the past 25 years, the employment rate has plunged to 58 percent and change. Some of the decline can be explained by a greater number of people re-entering schools in order to get better training, which could raise the country’s labor productivity over time. Still a decline of this magnitude implies very stressful job market conditions.

Though the above chart is not encouraging, from the perspective of real estate and business opportunities, what matters is how many people have jobs. And there are now close to 5 million more jobs today compared to the low point at the end of 2009. More jobs are one reason for higher home sales today and a steadily rising occupancy demand for commercial real estate. The bottom line is that though things could be better, real estate business opportunities are clearly on the ascent because of more jobs. Nonetheless, it is hoped that job creation pace at some point outpaces the population growth so that the employment rate can revert back to the normal higher levels.