The claim that Americans don’t want to work is not true. Americans from their mid-20s to mid-50s are now working at levels not seen in more than 20 years. This is a remarkable milestone. So many people have returned to work that several key job metrics have exceeded pre-pandemic levels. This surge in employment is a key reason the nation has avoided a recession. As more people get jobs, their incomes — and spending — rise. That, in turn, fuels more demand and more jobs across the economy. More people seeking employment also helps cool inflation, as companies are finding it slightly easier to hire and wage increases are moderating. But most of all, this trend is finally debunking the mistaken belief that people who left the workforce after the Great Recession of 2007-2009 were out of it forever.
Nearly 81 percent of workers ages 25 to 54, often dubbed “prime-age workers,” are employed, according to the latest Labor Department data. It is the highest share of employed prime-age workers since the spring of 2001. This underscores the rapid job market rebound since the pandemic. It took nearly 13 years for this ratio to recover after the Great Recession. It took only three years for this to occur after the pandemic.
While we have been critical about the hefty amount of pandemic aid Congress pumped into the economy, especially the American Rescue Plan that President Biden and Democrats enacted in 2021, one clear benefit of the multiple aid packages was a quick bounce back in labor demand.
Companies were so desperate for workers that they began hiking pay and offering flexible work situations. Better pay and better conditions lured many people back to work. The pay surge was especially strong for workers earning less than $20 an hour. On top of that, bosses were more willing to work around people’s desires to spend time with their families or participate in hobbies. It is unsurprising that the employment surge is occurring alongside a record number of Americans taking parental leave.
The employment gains have been broad-based. The Black unemployment rate hit an all-time low of 5 percent in March. That’s still higher than the White unemployment rate (3.2 percent), but it marks the smallest gap on record between the Black and White rates. It’s yet more encouraging news that this jobs recovery is reaching many Americans. There has even been some increase in older workers returning to jobs, along with more legal immigration, both trends that should be celebrated as the country faces the high cost of retiring the baby boomers.
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This economy is still far from perfect. Inflation remains a heavy burden, especially for low-wage workers facing steep rent increases and food costs. But the job gains are extraordinary.
The takeaway for the Federal Reserve is that “full employment” — the achievement of which is half of the central bank’s dual mandate — is more expansive than Fed officials realized; the right conditions will encourage many more people to come off the labor market’s sidelines than they imagined. They keep learning this lesson as workers defy expectations. The takeaway for Mr. Biden and Congress is to keep pushing policies that help people get back to work, including public transit and aid to families struggling to afford child care. The takeaway for employers, most of all, is that higher pay and more flexibility get results.