Edward E. Gordon
  1. President, Imperial Consulting Corporation

Correspondence Address:
Edward E. Gordon
President, Imperial Consulting Corporation


Copyright: © 2014 Gordon EE. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

How to cite this article: Gordon EE. The overlooked issue in US unemployment. Surg Neurol Int 21-Feb-2014;5:21

How to cite this URL: Gordon EE. The overlooked issue in US unemployment. Surg Neurol Int 21-Feb-2014;5:21. Available from:

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The December 2013 Bureau of Labor Statistics (BLS) Unemployment Report showed that only 74,000 people found new jobs. Of these, 31,000 were part-time. Yet, the US unemployment rate fell from 7% to 6.7%. You ask, how can this happen?

The answer lies in the fact that about 500,000 Americans quit looking for a job. They removed themselves from the BLS unemployment rate calculations.

What is going on? The US stock market has been booming. Interest rates remain very low. Federal Reserve economists and Wall Street pundits keep telling us that the recession is over. If you do not have a job, however, this seems pure fantasy. The share of the US population available to work is now at a 35-year low – a 62.8% labor participation rate. This is the same rate as in 1978. It includes all people who are not infirm, in the military, or locked up somewhere. These workers are either employed or still seeking a job today.

At the same time those workers not in the labor force, or who have given up looking, rose in December 2013 by 525,000 persons to 91.8 million! If this increase had been zero, the US unemployment rate would have remained unchanged at 7%! Those BLS numbers do not lie, they just distort reality.

There are those economists and pundits who claim that the swelling number of Americans who have dropped out of the labor force is due to the massive number of baby boomer retirements and more young people going to school. These claims lack credible proof.

A comparison of BLS labor participation rates from 1999 to 2013 for different age ranges shows a dramatic workplace shift is underway. There has been a major decline in workers under 45, while there has been a significant increase in the percent of people over 60 who are at work.

US workers aged 30-59, the prime age group for employment, comprise 50% of the potential workforce. They account for most of the decline in the US labor pool since 2007 and 75% of the decline for 2013. If you zero in on workers aged 45-54, their labor participation rate is 79.2%, the lowest since 1988! “It just keeps dropping and dropping,” states Julia Coronado, chief US economist at BNP Paribas. “It's depressing, as it's not just older workers retiring.”

At the end of 2007, when the recession began, 66% of Americans were at work. To return to that level in 2014, 8 million Americans would have to be added to the workforce. If this occurred, the current US unemployment rate would rise to 11.2%!

All of the above suggests that the pool of potential US workers is substantially higher than the BLS unemployment rate indicates. What is keeping these workers on the sidelines? I see a growing labor mismatch between vacant jobs and the skills of unemployed American workers. A structural unemployment problem has existed for the past decade, and it is now becoming more critical.” An Accenture 2013 Skills and Employment Trends Survey of 400 US executives found that 46% are concerned that they will not be able to find workers with the needed skills; a 2014 McKinsey survey of business and education providers in the European Union found that about a third reported difficulties finding workers with the right skills.

Clearly the US education to employment pipeline is broken. My research estimates that there are approximately 7.2 million vacant jobs in the United States that currently cannot be filled. My latest book, Future Jobs: Solving the Employment and Skills Crisis (Praeger, 2013), predicts that the lack of workers with appropriate skills for a 21st-century workforce in the United States, and in nations worldwide, could result in 14-25 million vacant US jobs by 2020. Future Jobs, however, does point to reform efforts underway in regions of the United States, as well as overseas, that have the potential to substantially alter this dire scenario, if they are rapidly brought to scale.

If this skills-jobs collapse continues, it will trigger a major economic crisis for many Americans. As the pain increases, we can expect a rising public demand for meaningful action by business and government at the regional and state levels to fix the jobs and skills disconnect, instead of the current fantasy that the US unemployment problem is ameliorating.

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