Janet Yellen and Barack Obama’s Economy Is Looking Good

Janet Yellen, Chair of the Board of Governors of the Federal Reserve System. (Photo: Brookings Institution)Janet Yellen, chair of the Board of Governors of the Federal Reserve System. (Photo: Brookings Institution)

 

As Congress debates plans to give even more money to the country’s richest people, it is worth briefly recounting where the economy is now, before we feel the effects of any tax plan. Basically, it is a pretty good story.

The overall unemployment rate for October was 4.1 percent. This is the lowest unemployment rate since 2000. And that was an extraordinarily good year for the labor market. We would have to go back to 1970 to find the last time the unemployment rate had been this low.

The unemployment rate for African Americans was 7.5 percent in October. The 7 percent level reached in September ties for the lowest figure on record. While these levels of unemployment are still unacceptably high, they are an enormous improvement from the near 17 percent rate hit at the low point of the downturn in 2010. The 4.8 percent rate reported for Latinos in October is also the lowest on record.

The good news on the unemployment rate must be qualified given the large number of people who have left the labor market. If we look at the employment rate (EPOP), the percent of people who are employed, it is still down for prime age workers (ages 25 to 54) by 1.5 percentage points from its pre-recession peak and by 3.1 percentage points from the high hit in 2000.

The decline took place for both men and women. This undermines the effort to blame the drop in EPOPs on problems specific to men that affect their ability and/or desire to work. Still EPOPS have been moving in the right direction as the labor market tightens. In the last two years the EPOP for prime age workers has risen by 1.5 percentage points, raising the possibility that we can at least get back to the pre-recession levels, if not the 2000 peak, assuming the recovery continues.

In addition to the gains in employment, we are also seeing wage growth that benefits those at the middle and bottom of the wage distribution. The…

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