The Score / October 13, 2023

Too Many Economists Thought This Was Impossible

The increase in the number of people working has helped tamp down inflation and has shown the importance of aiming for full employment.

Mike Konczal
(Infographic: Tracy Matsue Loeffelholz)

There are reasons to be cautiously optimistic about the US economy. While the inflation rate remains higher than before the pandemic, it has fallen during the past six months as supply chains have normalized and the broader economy has worked itself through the chaos of reopening. This occurred even as unemployment remained low—within the mid–3 percent range. Many economists said this would be nearly impossible.

We are not out of danger yet. Creeping energy prices and the resumption of student-loan payments could drive down growth. But a wave of productive investments unleashed by last year’s Inflation Reduction Act may be enough to counteract those negative forces.

Journalists have largely ignored one crucial aspect of this recovery: the expansion of labor force participation. The increase in the number of people working has helped tamp down inflation and has shown the importance of aiming for full employment. But to keep these advances going, we must invest more in care work. Otherwise, the skyrocketing costs of childcare in this country could hold back the economy, undoing our remarkable gains.

The growth of the labor force is so comprehensive it’s tough to summarize, but there are three straightforward data points to see it. First, overall labor-force participation, at 62.8 percent, is a half-point higher than the Congressional Budget Office had predicted it would be before the pandemic. There’s a more active labor market now than in 2019, and it’s a testament to the power of fiscal spending to fight a recession. It also proves that we weren’t at full employment before Covid.

Second, the percentage of adults between the ages of 25 and 54 with jobs is the highest in decades; overall, it’s as high as it was in 2001, and for women, it’s the highest on record. The 2010s were a decade of wondering where the jobs were—and even asking whether people wanted to work. The stubbornly high unemployment rate—which was as high as 8 percent at the beginning of 2013—had many economists assuming that high unemployment rates were just how the economy worked. Now we know that if the demand is there, the workers will show up.

Third, the employment rate for people with disabilities is the highest since data started being recorded in 2008. At 23 percent, it is four points higher than in 2019. It’s not just a matter of improvements in technology; as labor markets get tighter, employers expand the pool of workers from which they hire.

There are a few reasons this hasn’t received much coverage. First, inflation remains high, which is probably what people mean when they say the economy’s vibes are bad. But there are also more opportunistic reasons. The press loves stories from the point of view of bosses, and pundits rush to cover catchphrases like “quiet quitting.” When outlets do this, they miss how dynamic the economy is: Yes, people have been quitting jobs at record rates, but it is because they are taking new and better jobs.

Many economists said during the Great Recession that the kinds of numbers we’re seeing now would never exist again. They said the mass unemployment of the 2010s was inevitable. They said it wasn’t the result of policy choices; technological change and workers who simply lacked the skills or effort to find jobs were to blame.

But there’s also a more theoretical problem: Many economists believe that both the workforce and what the economy can produce are fixed in the long term. But this economy demonstrates that a tight labor market can pull in more workers, which allows the economy to produce more and incentivizes companies to produce more efficiently, which alleviates the supply constraints that drive inflation.

These are all reasons to embrace the goal of full employment. But it’s also important to look at what’s next. At the end of September, $24 billion in funding for childcare centers ended. That could put a drag on this progress. In many European countries, close to 80 percent of women work. Our much lower labor participation rates for women are largely driven by our fragmented and broken childcare system. We’ve made tremendous progress in increasing labor participation—but to keep it up, we need a care infrastructure that supports working families. That would make this recovery get even stronger.

Support The Nation this Giving Tuesday


Today is #GivingTuesday, a global day of giving that typically kicks off the year-end fundraising season for organizations that depend on donor support to make ends meet and enable them to do their work—including
The Nation

To help us mobilize our community in this critical moment, an anonymous donor is matching every gift The Nation receives today, dollar-for-dollar, up to $25,000. That means that until midnight tonight, every gift will be doubled, and its impact will go twice as far. 

Right now, the free press is facing an uphill battle like we’ve never faced before. The incoming administration considers independent journalists “enemies of the people.” Attacks on free speech and freedom of the press, legal and physical attacks on journalists, and the ever-increasing power and spread of misinformation campaigns all threaten not just our ability to do our work, but our readers’ ability to find news, reporting, and analysis they can trust. 

If we hit our goal today, that’s $50,000 in total revenue to shore up our newsroom, power our investigative reporting and deep political analysis, and ensure that we’re ready to serve as a beacon of truth, civil resistance, and progressive power in the weeks and months to come.

From our abolitionist roots to our ongoing dedication to upholding the principles of democracy and freedom, The Nation has been speaking truth to power for 160 years. In the days ahead, our work will matter more than it ever has. To stand up against political authoritarianism, white supremacy, a court system overrun by far-right appointees, and the myriad other threats looming on the horizon, we’ll need communities that are informed, connected, fearless, and empowered with the truth. 

This outcome in November is one none of us hoped to see. But for more than a century and a half, The Nation has been preparing to meet it. We’re ready for the fight ahead, and now, we need you to stand with us. Join us by making a donation to The Nation today, while every dollar goes twice as far.

Onward, in gratitude and solidarity,

Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

Mike Konczal

Mike Konczal is a contributor to The Nation and a director at the Roosevelt Institute, where he focuses on inequality, unemployment, and new economic ideas. He is author of Freedom from the Market: America’s Fight to Liberate Itself from the Grip of the Invisible Hand (The New Press).

More from The Nation

Georgia’s Disastrous Medicaid Work Requirements

Georgia’s Disastrous Medicaid Work Requirements Georgia’s Disastrous Medicaid Work Requirements

Georgia’s Republican governor, Brian Kemp, said that 345,000 people would enroll in the state’s Medicaid program, which has strict work requirements—so far just 5,118 have.

Column / Bryce Covert

Every Schoolchild Should Eat Free

Every Schoolchild Should Eat Free Every Schoolchild Should Eat Free

Full bellies lead to attentive minds.

Bryce Covert

Raising the Minimum Wage Comes Cheap

Raising the Minimum Wage Comes Cheap Raising the Minimum Wage Comes Cheap

Studies overwhelmingly show that the effect of increasing the minimum wage on employment rates is basically zero.

Bryce Covert

You Deserve a 4-Day Workweek

You Deserve a 4-Day Workweek You Deserve a 4-Day Workweek

It’s time for Americans to claw their lives back from work.

Bryce Covert

We Have the Solution to Child Poverty. Republicans Are Blocking It.

We Have the Solution to Child Poverty. Republicans Are Blocking It. We Have the Solution to Child Poverty. Republicans Are Blocking It.

The expansion of the child tax credits under the American Rescue Plan halved child poverty. When the policy ended, child poverty shot back up.

Bryce Covert

“Bidenomics” vs. “Reaganomics”

“Bidenomics” vs. “Reaganomics” “Bidenomics” vs. “Reaganomics”

What will it take for Biden’s economic agenda to transform the political landscape the way to Reagan’s did?

Mike Konczal