After years of ignoring the obvious, the Federal Reserve has been finally forced to admit that the labor force participation rate matters, and in fact has started to point it out as a clear negative when it comes to Yellen’s “dashboard” of thresholds which will allow the Fed to raise rates (for the obvious reason that the Fed is desperate to delay ZIRP as long as possible and is now highlighting all that is wrong with the economy, contrary to Obama who is still focusing on all the rigged greatness of the US recovery) and to do so is going through Zero Hedge archives to note all those things which everyone had ignored for years and which we have pointed out as structural failures of the so-called recovery.
So while we are happy to oblige the Fed with our tens of thousands of articles summarizing what is broken with the US economy thanks to, well, the Fed, here is another one: one which the Fed can use next year when the time to hike rates has come and gone, and when the Fed is once again scratching its head what to blame it on.
The chart below shows the civilian employment to population ratio: a convenient indicator of the real state of the US labor market which does away with the labor force entirely, and the associated rhetoric of why it may or may not be plunging, and merely focuses on two simple things: total population and the total civilian population of the US. One thing is clear: the ratio crashed when the depression started and has flatlined since. Which, incidentally, may be all you, and the Fed, needs to know about the recovery.
But wait, it gets worse, because according to the WSJ, roughly one in three U.S. workers is now a freelancer.
Wait, how many?
Fifty-three million Americans, or 34% of the nation’s workforce, qualify as freelancers, according to a new report from the Freelancers Union, a nonprofit organization, and Elance-oDesk Inc., a company that provides platforms for freelancers to find work. These individuals include independent contractors, temps, and moonlighters, among others.
So 53 million, let’s call them, temps? That is probably the most stunning number we have seen in years, and flips the entire premise of a “job recovery” on its head.
The experience of work has fractured in recent years, said Fabio Rosati, chief executive of Elance-oDesk. Layoffs that accompanied the recession forced many individuals to forge a living from short-term gigs, while online marketplaces such as Elance, TaskRabbit and Uber emerged to match independent workers with companies or individuals in need of labor. Plus, the rise of mobile technologies allow more people to work when and where they choose.
Or not work, considering there is no contract tying them to a job.
Independent workers “don’t have the workforce protections that have developed over the last 80 years. They are simply on their own,” said Robert Reich, the Secretary of Labor under President Bill Clinton and now a professor at the University of California, Berkeley. An accurate census would help policymakers determine how to fill gaps, he said.
Counting the number of contingent workers has not been a high priority in Washington, DC over the last couple of decades. The number “is likely to be large and growing and there is no political advantage in signaling that fact,” Mr. Reich said.
Companies, eager to lower payroll costs and take advantage of a more flexible workforce, are relying more on contingent labor. According to the National Employment Law Project, temp jobs now constitute an all-time high of 2% of all positions in the U.S., or 2.8 million.
So the Fed is trying to boost wages and generate demand-pull inflation at a time when some 53 million US workers, or a third of total, are “freelancers”, which is a polite way of saying part-time workers. and “moonlighers.”
Well…. good luck!