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Shrinking workforce shadows good jobs news: Our view

The Editorial Board
USATODAY
The unemployment rate, 6.3%, is dipping to levels last seen before the 2008 financial crisis.

Since the Great Recession ended, the economy has been slowly healing. With Friday's report that 217,000 non-farm jobs were created last month, the U.S. has now recovered all 8.7 million jobs lost during the recession. The unemployment rate, 6.3%, is dipping to levels last seen before the 2008 financial crisis.

Hurray! Break out the bubbly! Party like it's 1999!

Or maybe not. These numbers, while significant milestones, don't tell the whole story. The new record of 138.5 million people in the workforce doesn't account for population growth. And the falling unemployment rate is driven not just by more people working, but also by more people giving up the search.

This decline in the "labor force participation rate" (the fraction of the available workforce that's actually working, or looking) is one of the most troubling trends of our time.

At 62.8%, the rate hasn't been this low since a horse last won the Triple Crown 36 years ago. Put another way, 37.2% of people 16 and older don't have a job and aren't actively seeking one.

Even after accounting for Baby Boomers retiring and more people going to college, this translates to 6 million people who could be working or looking for work. These millions mean a weaker economy, lower tax revenue and greater government expenses for public assistance, health care and retirement.

The trend has many causes. But the most obvious is an increasingly out-of-whack federal budget that makes it easier not to work while doing less than it should to generate good jobs.

Budget cuts over the past few years have shortchanged funding for job-creating programs such as transportation projects and scientific research. When interest rates are as low as they are now, infrastructure spending should be a no-brainer.

Where's all the money going? To come at the federal budget with fresh eyes is to be dumbstruck by one simple statistic: Nearly two-thirds of every dollar spent by Washington is on some form of benefit.

In the 1960s, programs such as Medicare, Medicaid, Social Security, food stamps and government retirement accounted for a third of spending. As late as the 1990s, they were under half. Today they are 62% and heading higher.

Take, for instance, Social Security disability. As the result of expansions of the program dating to the 1980s, 8.9 million people were classified as disabled last year, a near doubling from the 4.9 million in 1999.

Or take traditional Social Security. For each person receiving benefits today, just 2.9 are working. In the program's early days, when lifespans were shorter, the ratio was 10-to-1 or more.

Throw in hefty expenditures on food stamps and subsidized health care, and generous retirement programs for military personnel and public workers, and the options for not working multiply.

None of this means Washington should shred the social safety net. Nor should the population be glibly divided into "makers" and "takers." But unless there are fewer disincentives to work and more of the kinds of jobs that entice people to stay in the workforce, the nation's economic growth will be stunted.

USA TODAY's editorial opinions are decided by its Editorial Board, separate from the news staff. Most editorials are coupled with an opposing view — a unique USA TODAY feature.

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