The current prime age (25-54 years old) unemployment level hovers around multi-decade lows of 3% – essentially full employment – while the prime age labor force participation rate is far from its peak – implying less than full employment. Since the female workforce rose to maximum participation rates in the 1990’s on the gender equality wave, we have never seen total prime age unemployment fall beneath 2.9%, which means there are extremely few able or willing to seize the record number of job openings today. The 2.6 Million prime age workers needed to match the record saturation levels of the 1990’s is still far from the 7.1 Million unfilled job openings today. To attain a record prime worker participation rate over 84% would be a Sisyphean feat as it would require virtually zero unemployment, which structural and frictional impediments prevent. 

Job Polarization: Why do these post college to pre-retirement age people remain on the sidelines? Studies have shown that only a small fraction of this modern era slack in labor participation abstains from working due to drugs, mental health or obesity. We have posited previously that the high tech gig economy of Uber and Air B&B have led to many college grads exploring freelance contracting after failing to find a job commensurate with their education. More broadly, studies hint that these prime age workers are both over qualified and under qualified for the vocational openings that remain. Personally, we see this as owners in the manufacturing space. The low skilled jobs are our the most difficult hire as college grads that are most trainable would rather sit idle or drive cars temporarily rather than accept a position beneath their pay grade. The shrinking pool of non college educated workers to fill our entry jobs lack the discipline or ability to be trained. While lower skilled workers are historically the least employable, in recent years its the college grads that increasingly struggle to match their skill level with jobs available. Most students who spend $70,000 to $150,000 for 4 year Public or Private school college degrees will not be settling for $13 to $20 an hour paychecks in high demand when they need middle income paychecks of $30 to $50/hour. These middle class jobs are the most easily automated and declining in demand relative to lower skill or advanced skill vocations. This has led to increasing job polarization of college graduates, under qualified for high skilled upper income jobs and over qualified for lower paying entry level work. More Bachelor degrees and psychology majors are not the answer. The less educated need Trade Schools and the growing college segment needs more advanced degrees.